How to handle your growing life insurance needs

Life never stays static. We move, we get married (and sometimes divorced), we add children to the mix, things happen, etc. – and for those of us policyholders, our life insurance coverage needs to change to reflect the new situation. Life events such as getting married or having your first child can impact your existing coverage, rendering it insufficient in some cases. Many young people purchase life insurance to hep cover their mortgage, but as the family becomes larger and your needs grow, you may need to increase your coverage to reflect your new circumstances.

If you’ve experienced a qualifying life event, that’s cause for an insurance review and perhaps some changes made to your existing insurance coverage. We’ll go into that a bit later on. In short, many insurance advisors recommend purchasing coverage for several times more than your current net income, to make room for growth. Other plans offer upgrade options. Read on to learn more about how you can handle your growing life insurance needs.

What is a qualifying life event?

Major life events are considered qualifying life events in the face of your insurance provider. These are things like changing jobs, losing a job, getting a new job (where your employer-provided life insurance may have been impacted), there’s a death in your household, a new baby born in your household, or a change in your primary residence.

Here are a list of some qualifying life events:

• Becoming married
• Getting divorced
• Losing existing insurance plan due to job loss
• A death results in a change in your family status
• Having a new baby or adopting a child

So, if you’ve recently experienced a “qualifying life event,” it may be time to pull up your insurance documents, do a review, and determine if it’s time to make some revisions.

Do I need term or permanent life insurance?

If you’ve recently gotten married and you’re considering purchasing a life insurance policy for you and your spouse, you might be wondering – should I get term or permanent life insurance? See, while you may only need the term policy now as it’s just as you and your spouse, what happens if you decide to expand? What might your financial situation look like in 10, 20 years?

Term life insurance policies come in 10, 20, and sometimes 30-year installments. A 10-term life policy is deal for people who have shorter-term financial responsibilities. A 20-term life policy is ideal if you and your spouse have a more accurate idea of what the future will hold and the kind of debts you may have.

Permanent life insurance is typically for the more wealthy, or for those who have an estate they want passed down to their heirs. Some term life insurance policies are convertible at the end of the term to a permanent life insurance policy. Discuss with your provider about your needs and the needs of your loved ones to ensure the policy you purchase is the right choice for you.

How does my life insurance change in the event of a divorce?

A divorce can be a messy time, and a lot has to be done. If you have children, it’s a good idea to keep your life insurance – but it may need some necessary beneficiary changes. If you end up a single parent in the event of a divorce, you’ll want to take out life insurance on yourself to ensure your child’s future is protected. If you end up with primary custody of your children, you will want to keep your ex as a beneficiary to ensure there’s enough to replace child support until that child is 18. If no children are involved in the mix, and your divorce was an acrimonious one, you probably no longer want your ex benefiting from your death. In fact, there’s few good reasons to have your ex listed as a beneficiary if no children are involved in the mix. Most life insurance policies will allow you to change the beneficiary at any point. Simply contact your life insurance provider to let them know of the new situation.

TLDR; in the event of a divorce, both the policy owners and beneficiaries need to updated to account for the marital status change and its resulting implications on your policy.

How do I upgrade my coverage as my needs change?

It is always recommended that you review your life insurance coverage at least once per year to gauge if your coverage still fits your needs. However, upgrading or replacing your existing coverage isn’t always the easiest thing to do because rates can go up as your age increases, your health could change, etc. Some plans, however, offer options for two of the following:

• A conversion option. If you’d like to continue with your existing protection, you have the option to convert your term life insurance coverage to a permanent life insurance policy, without needing to provide additional medical information.

• An automatic coverage increase. Once you’ve purchased this coverage, it will automatically increase year by year. These plans are great because they don’t require you to take any additional medical exams before your coverage may increase.

With these plans, you can be sure your family can continue to be protected throughout the years. Panda7 is more than happy to discuss your insurance needs with you. Simply give us a call or request a quote today.