Most people have specific financial objectives in mind when they buy life insurance. After all, the value of the policy is designed to specifically assist your loved ones in the event of your death. However, as your life changes, so too might your financial concerns. Therefore, you might find that a policy you bought several years ago is no longer truly optimized to your advantage. At this time, you might wonder whether you need to increase your life insurance coverage.
Let’s take a closer look both at when you might need to increase your life insurance, and how you can do so effectively.
The Challenges of Increasing Your Life Insurance
There are almost no limits on the amount of life insurance one person can buy. Therefore, if you ever need to buy more coverage, you should be able to do so relatively easily with the help of your agent.
Still, a challenge arises out of the fact that once you buy one policy, you might not be able to simply increase the death benefit on that plan at the time you choose. Adding additional coverage into an existing plan increases your risk to the life insurer. Therefore, insurers are often hesitant to arbitrarily increase a policyholder’s coverage.
All the same, some policies offer guaranteed insurability riders, which allow the policyholder to increase their death benefit without having to jump through as many hoops as they would if they were applying for an all-new policy. Still, policyholders should inquire whether their primary plan has this benefit at the time of enrollment. If it doesn’t, then they will often find that they cannot add it in later.
Furthermore, it is possible to buy multiple life insurance policies on yourself, depending on whether your financial situation allows this extra investment. Therefore, you might be able to have certain policies in place for a certain amount of time, and you can then drop those policies after they reach a point that they are no longer useful to you. You might still be able to maintain other coverage, however, that will continue to play an essential role in securing your financial future.
Consider some of the situations where you might need to increase your life insurance.
Having More Children
With each new addition to your family, your financial obligations will grow. Having more children increases living expenses, and therefore will mandate more support from life insurance in the event of your death. You therefore want to adapt your life insurance to meet the financial needs of each child as closely as possible.
Some people buy life insurance with the express intention of using it to pay off their mortgage in the event of their death. By doing so, after all, you would enable your spouse and children to continue to live securely in your home. Therefore, if you move into a new home with a significantly high mortgage obligation, then this might be a time to increase your life insurance.
Changes to A Family’s Health or Living Needs
Life insurance is often harder to get when you have a chronic health problem or pre-existing condition. However, that doesn’t mean you can’t still enroll in quality coverage. Furthermore, life insurance is a great way for the policyholder to look out for someone else’s medical or other care needs if they rely on the insured for assistance.
Consider a situation where a child has a disability, and they therefore will need long-term care. Or, perhaps a spouse has several health issues and would face significant financial hardships if you weren’t there to help pay medical bills, take them for treatments or provide other essential support. In either case, you want to enable a loved one to be able to still receive the care they need despite the fact that you might not be around to provide for them.
It’s never a bad time to review your life insurance, and you shouldn’t hesitate to reach out to one of our expert agents for assistance. We’ll help you both investigate the best ways to increase your coverage effectively and help you do so in the most cost-friendly manner.
Also Read: Does the Cost of Life Insurance Go Up with Age?
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