Throughout my life, I’ve learned one undeniable fact that nothing stays the same for too long and you need to adapt to change as you get older. This is true with life insurance needs, as you get older and have kids in college, or are considering purchasing a second home—your life insurance policy should reflect those major life changes. The only issue with re-writing a policy is that, unfortunately people’s health changes as the years pass—which ultimately means that your premium will likely change as well. With that in mind, this is why it is increasingly important to start planning for your future and your family’s future when you are young and in good health.
Using my friend as an example; he’s thirty-two years old and is married, with a life insurance policy through his employer. His current policy is two-times his salary and is valid for as long as he works at his current employer, which was fine for his needs at the time. In the past two years, he bought a house and he and his wife are expecting a child in the next month, which are two major life events. The other night at dinner, he asked me what I thought about his current situation related to life insurance. I was honest and told him that he was significantly under-insured, especially with a soon to be newborn baby on the way and the house he just purchased about two years ago. Long story short, he’s still young and in great health—which means that he will not pay an exorbitant amount of money for his life insurance policy and if something were to happen to him, his family would be in a good financial situation and well-set for their future.
What this situation that I’ve laid out in the prior paragraph boils down to is: life insurance needs, much like a person’s lifestyle, change as you get older. That 250,000 dollar term policy that you took out when you were in your late twenties or early thirties will not cover half of your debts and would ultimately leave your family with the burden of shouldering those debts, or drastically changing their lives to make sure that those debts are taken care of. The aforementioned situation is why I strongly suggest that life insurance policies be reviewed every 3-5 years.
It is never too late to review your life insurance policy, especially if it’s been five or ten years since you’ve last reviewed it. This process could save you and your family hundreds of thousands of dollars of coverage for a meeting that will take no more than a half hour with a qualified insurance professional. If deemed necessary, you could come away with a policy with a greater face amount and more length of coverage just for sitting down and discussing it with an insurance agent. In the long run, people have enough to worry about when a loved one passes; being worried about an unanticipated financial situation should be the last thing on your mind while having to grieve for a family member that has recently passed away.