How to meet your growing life insurance needs

Life never stands still. We move, we get married (and sometimes divorced), we have children, things happen, and so on – and for those of us with a policy, our life insurance coverage needs to change to reflect the new situation. Life events, such as marriage or the birth of your first child, can affect your current protection, sometimes making it insufficient. Many young people buy life insurance to cover their mortgage, but as your family grows and your needs increase, you may need to increase your coverage to accommodate your new circumstances.

If you've experienced a qualifying life event, it warrants a review of your insurance and may require some changes to your current coverage. We'll discuss this in more detail later. In short, many insurance advisors recommend purchasing coverage several times higher than your current net income to allow for future growth. Other plans offer upgrade options. Read on to learn more about how you can meet your increasing life insurance needs.

What constitutes an eligible significant event?

Major life events are considered eligible events for your insurer. These include things like changing jobs, losing a job, getting a new job (which may have affected your employer-provided life insurance), a death in your household, a new baby in your household, or a change in your primary residence.

Here is a list of some eligible life events:

• Getting married
• Divorcing
• Loss of an existing insurance plan due to job loss
• A death brings about a change in your family situation
• Having a baby or adopting a child

So, if you have recently experienced an "eligible life event", it may be time to retrieve your insurance documents, review them, and determine if it is time to make any changes.

Do I need term or permanent life insurance?

If you recently got married and are considering buying a life insurance policy for yourself and your spouse, you might be wondering whether you should get term or permanent life insurance. You see, even though you only need the term "policy" now, since it's just you and your spouse, what happens if you decide to expand? What might your financial situation look like in 10 or 20 years?

Term life insurance policies are available for 10, 20, and sometimes 30 years. A 10-year policy is suitable for people with short-term financial responsibilities. A 20-year policy is ideal if you and your spouse have a clearer idea of what the future holds and the types of debts you might have.

Permanent life insurance is generally for wealthier individuals or those with an estate they wish to pass on to their heirs. Some term life insurance policies can be converted into permanent life insurance at the end of the term. Discuss your needs and those of your loved ones with your provider to ensure the policy you purchase is the right choice for you.

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

Divorce can be a difficult time, and there's a lot to take care of. If you have children, it's a good idea to keep your life insurance policy, but you might need to change the beneficiary. If you become a single parent as a result of the divorce, you'll want to purchase life insurance to ensure your child's future is protected. If you end up with primary custody of your children, you'll want to keep your ex as a beneficiary to ensure there's enough to replace child support until that child turns 18. If no children are involved, and your divorce was acrimonious, you probably no longer want your ex to benefit from your death. In fact, there's little good reason to have your ex listed as a beneficiary if no children are involved. Most life insurance policies will allow you to change the beneficiary at any time. You simply need to contact your life insurer to inform them of the new situation.

In the event of a divorce, the policyholders and beneficiaries must be updated to reflect the change in marital status and its impact on your policy.

How can I improve my coverage as my needs change?

It's always recommended to review your life insurance coverage at least once a year to determine if it still meets your needs. However, upgrading or replacing your current coverage isn't always the easiest thing to do, as rates can increase as you get older, your health may change, and so on. Some plans, however, offer options for two of the following:

• An option of conversionIf you wish to maintain your current protection, you have the option to convert your term life insurance into permanent life insurance, without having to provide any additional medical information.
• An increase automatic of the coverage. Once you purchase this coverage, it will automatically increase year after year. These plans are excellent because they don't require you to undergo any further medical examinations before your coverage can increase.

With these plans, you can rest assured that your family will remain protected for years to come. Panda7 is more than happy to discuss your insurance needs with you. Simply give us a call or request a quote today.