Life insurance is a crucial component of a comprehensive financial plan, providing peace of mind and financial security for your loved ones in the event of your passing or can no longer earn an income. However, life is dynamic and as circumstances change, so too should your life insurance policy. Regularly reviewing your personal life insurance ensures that it continues to meet your needs and those of your loved ones. Here's a guide on when and why you should review your life insurance cover.
1. Major life events
Significant life changes often necessitate a review of your life insurance coverage. These events can include:
Marriage or divorce
Getting married or divorced can significantly alter your financial responsibilities and the needs of your dependents. A review can help ensure that your policy reflects your current marital status and financial obligations.
Birth or adoption of a child
The addition of a new family member increases your financial responsibilities. Reviewing your policy can help ensure that your coverage is sufficient to provide for your child's future needs, such as education and living expenses.
Home purchase
Buying a home is a major financial commitment. Ensuring that your life insurance coverage is adequate to cover mortgage payments in the event of your passing can protect your family from financial strain.
Changing employment
Changing jobs, moving from full time to part time or change of industry may require you to review your insurances to ensure that the terms of the policies are still relevant.
2. Changes in financial situation
Your financial situation can change due to various factors, such as:
Income changes
A significant increase or decrease in income can affect your life insurance needs. If your income has increased, you may want to increase your coverage to maintain your family's standard of living. Conversely, if your income has decreased, you might need to adjust your policy to align with your current financial situation.
Debt levels
Accumulating or paying off significant debt can impact the amount of coverage you need. It might be necessary to adjust your level of cover so that any lump sum payments (if you pass away) or replacement income streams (if you're temporarily unable to work) are enough to meet your debt obligations.
3. Changes in health status
Your health status can significantly impact your life insurance needs and premiums:
Improved health
If your health has improved since you purchased your policy, you may qualify for lower premiums. Consider reviewing your policy and shopping around for better rates.
New health conditions
Conversely, if you've developed new health conditions, it's essential to review your coverage to ensure it still meets your needs.
Adapting your life insurance to life's changes
Regularly reviewing your personal life insurance policy is essential to ensure it aligns with your current life circumstances and financial goals. By considering major life events, changes in financial situation and health status, you can make informed decisions that provide lasting security for your loved ones. Remember, life insurance is not a one-time purchase but a dynamic component of your financial strategy that should evolve with you.
How Gallagher can help
Wherever you are on your financial journey, from early career to retirement, we can help you plan for the future and adjust to changes when 'life' happens.
From busy individuals to those with complex business or personal situations, our advisers can help you achieve your financial goals by bridging the gap of where you are today and where you want to be tomorrow. Get in touch today.
