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Tuesday, December 24, 2013

Events that trigger a life insurance review

Insurance cash value investments can be increased or descreased
Major life changes are good times to review life insurance
By Mitchell Simmons

Getting married was definitely one of the highlights of my life. To say it was a life changing event is hardly doing it justice, for the marriage not only included my wife and I but her five year old son as well. 

For sure, there were all sorts of changes at hand. But one I managed to overlook was my life insurance policy. It got me to thinking. 

If someone that works in the insurance field can overlook the need to review their life insurance needs, then how many others are there that unknowingly do the same thing.

Any number of life events can earn a  review of your life insurance needs. Many mistakenly assume that once they have life insurance coverage in place all they need to do is keep up with the premiums and the rest will take care of itself. Fortunately most individuals catch this oversight before anything happens, but if not it can leave their loved ones without the resources the policy owner hoped to leave them with.

When the circumstances in your life change, it presents a new opportunity for you to protect those that mean the most to you. Below are life events that should trigger you to re-evaluate your life insurance needs.

Getting married

When you’re young and single, life insurance is an almost nonexistent concept. But once you get married that all changes. Suddenly you have someone else depending on your income, even if both of you are working. If you or your spouse should pass away, the one left will likely rely on those insurance benefits to meet expenses and pay off debts.

Having children

The birth of a child is another life event that should trigger a review of your insurance needs. The benefits of an adequate life insurance policy will ensure that your family is taken care of in your absence. The proceeds will ensure that such expenses as the mortgage, vehicle payments, child care are cared for now as well as any future expenses such as a college education.

Emptying the nest

Once your children are out of the house and successfully on their own you may contemplate lowering or dropping your life insurance. Before doing so, take into consideration the needs of your spouse in the event you die. Keep in mind that an insurance policy is a good way to transfer wealth to your children or grandchildren.

Getting divorced

Divorce will bring a variety of financial issues to the table, including life insurance. If you will be paying (or receiving) child support life insurance will guarantee these obligations are continued. Ownership of a policy may be point of contention in a divorce settlement.

Entering retirement

When you’re ready to retire is another point at which you want to reconsider your life insurance needs. If you’re one of the fortunate that have all of your debts paid off and have obtained financial security, then good for you. You may want to re-evaluate the need for life insurance. Keep in mind that a life insurance policy is a good way to pay off any estate tax bills or to use as a contribution to charity.

These life changing events are a good time to reconsider your insurance needs. Additionally, over time the policy you originally purchased may not currently provide the same bang for the buck. Although your insurance won’t change in the event your health takes a turn for the worse, you can check into lowering your premium if you lose a significant amount of weight or quit smoking. 

About the author: Mitchell Simmons helps individuals from all walks of life with their insurance needs for Life Source Direct. He strives to help his clients strike the balance with the proper insurance coverage that offers both affordability and peace of mind.

Image: Moolanomy, Creative Commons