Having the right insurance in place is essential if you wish to protect your family and yourself from the financial consequences of an untimely death, disability or critical illness. The exact types and amounts of insurance you should purchase will vary depending on your circumstances. But since life circumstances change all the time, it is important to have a yearly review with your financial advisor to ensure the insurance you have is still the right fit.
The following are a few examples of life changes that could necessitate a change to your insurance policies.
Getting married or having children
When you are single, your insurance needs are usually pretty simple. Once you have a family however, you’ll want to make sure that they are protected. Would you like to provide an income to your spouse in the event that you pass away? Would you like to ensure that your children’s educations are paid for? The right insurance can do these things and more.
Going through a divorce can change your insurance needs. You may require less insurance if you no longer need to provide for a spouse – but if you are ordered to pay spousal support by a judge, you may also be required to buy more insurance. At the very least, you probably want to meet with your financial advisor to reconsider who your beneficiaries and trustees are.
A new job is another reason to re-evaluate your insurance needs. Perhaps you are making more money and you want to increase the level of inheritance you leave behind. A new job may also put you in a different class for disability insurance and you may be able to get more long-term disability insurance at a lower cost than you could with your previous job.
Your Budget Has Changed
Whether you have more money or less, both could affect your insurance needs. If you have more money, you might want to invest in more insurance. Did you know that certain types of insurance policies have tax advantages? An increase in income may make you want to take a look at your options.
If you have less money, you may want to consider lowering your coverage or changing your type of insurance. Oftentimes people in financial crisis are tempted to cancel their insurance altogether, but it is a much better idea to speak with your advisor about your options for lowering the cost rather than giving up all of your coverage.
If you make a significant purchase with debt – such as a new home – having the right insurance coverage can help ensure that your family can continue to live in that home should you pass away or become unable to make the payments due to a disability or critical illness. Mortgage lenders will often offer mortgage insurance for this purpose, but a term policy through your regular insurance company is usually more cost-effective and can provide more benefits to your family.
Changing beneficiaries is another important reason to meet yearly with your advisor to review your insurance needs. Has one of your beneficiaries passed away? Did you get remarried or have more children? Is there a favourite charity that you would like to contribute to when you pass away? Your beneficiaries are likely to change from time to time, and regular reviews will help you to do that.
Of course, there are other reasons as well that you should regularly be reviewing your policies. Some policies have options that you can take advantage of at various intervals such as the ability to purchase more insurance without proving your health or a return on premium. These are options you might not know about unless you are meeting with your advisor.
If it’s been awhile since you’ve reviewed your insurance needs, contact MiLife Insurance today for a consultation.