Life Insurance

5 Times to Re-evaluate Your Life Insurance Needs

Child playing on bed
When a life insurance policy is well-tailored to you and your circumstances, it can serve as a robust safety net. But sometimes life shifts in ways we don't anticipate, and that customized piece of financial security can ring a bit out of tune. When this happens, it's crucial to re-evaluate life insurance policies you have in place.

Often, these changes are the result of positive life events. Some life changes may only lead you to increase your coverage or add a beneficiary. Still, to get the most from your insurance policy, it's best to tailor it to your needs as much as possible.

How much life insurance do I need?
To make it easier, we created an online life insurance calculator you can use to help assess your individual needs.

How often should you re-evaluate your insurance?

Some experts recommend assessing your life insurance policy each year. Most agree that it should be done after significant life events. 

Because of how life insurance is structured and the purposes it serves, alterations in income, debt, family size, marital status, and more can impact what kind of policy you want or need. When there are changes in these variables, it's a smart time to re-evaluate your insurance. 

Beyond life events, your insurance needs at different stages in life can also vary.

How do you evaluate life insurance?

When you evaluate life insurance, it's essential to be practical. 

First, you'll want to list all of your financial needs that could depend on the policy benefit. Then, compare that to your current financial circumstances. 

Important things to consider are:

  • How many people are financially dependent on you
  • How much debt you have
  • How much coverage you want
  • Who your beneficiaries will be

Throughout all of this, it's essential to keep track of what life insurance rates are acceptable for your budget.

Life changing event insurance re-evaluation

While many situations can encourage you to re-evaluate your life insurance needs, some are more common than others. What qualifies as a life-changing event for insurance can vary between policyholders. 

Below are five of the most common life event insurance variables that prompt a reconsideration of your life insurance plans.

  1. Buying a house: If you're taking on significant debt via a mortgage, this debt can be factored into your life insurance policy to ensure you have enough coverage to address it. 
  2. Marriage: Spouses sometimes choose to procure joint life insurance policies. Either way, marriage is a standard time to ensure that your new spouse is listed as a beneficiary on your policy.
  3. Divorce: Removing each other from insurance policies is common in divorces and can help prevent financial complications down the line.
  4. Parenthood: Having children can lead to higher expenses and debts, but it's also a good moment to add a new beneficiary to your plan. Because of those higher costs, it's also an excellent time to consider increasing your coverage.
  5. Children become financially independent: When your children are grown and have a home and income of their own, you may not need to worry about their financial future as much. At this point, you may consider reducing your coverage.

Review your life insurance policy

There are a few main aspects of your policy you'll want to consider each time you go through a life event insurance re-evaluation. These include: how the payout is handled, how big the policy should be, and what kind of policy is best for you. Consider the following changes to come up during a re-evaluation:

  • Change beneficiaries: This can be done at any time, but it's essential to keep track of who your beneficiaries are. The amount of payout and who receives it are two of the most significant aspects of a life insurance policy.
  • Change coverage size: How much coverage you need can change at numerous points in your life. Whenever a life event adds or removes long-term financial obligations from your life, it's important to re-evaluate the size of your policy. 
  • Switch policy types: In some situations, it's possible to convert one type of life insurance policy into another. If your insurance needs have changed sufficiently, you may find that the kind of policy you have no longer best serves them. 

Who needs life insurance

Many people can benefit from online life insurance. One of the convenient things about life insurance policies is that they rarely stipulate how the payout can be used. As a result, the intentions of policyholders can vary. 

Generally, people with high debt levels, who own or invest in businesses, or function as the primary income earner in their home, are among those who need life insurance most. 

How much term life insurance do I need? 

Determining how much life insurance coverage to get can be a complicated process. First, determine what your goals are for your policy. What financial wants or needs are you protecting by purchasing the policy? Once you decide, it's a matter of calculating how much coverage you need to meet those needs. Balance that figure with how much you're willing and able to spend on your premiums. Get your rates today with Ethos Life.

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