5 Life Events That Should Trigger a Life Insurance Review
Life insurance is great for protecting your family’s financial future. However, as your life evolves, so do your insurance needs. In many cases, the amount of cover that suited you five or ten years ago might not be enough today.
There are some big moments in life that can affect how much protection your family would need should the unexpected happen. That’s why it’s essential to review your life insurance from time to time and make sure it still matches your current circumstances.
In this guide, we’ll go through five life events in particular that should prompt you to take another look at your policy.
1. When you get married
Being married or in a long-term relationship often means sharing responsibilities, from rent or mortgage payments to everyday bills. If one partner passes away unexpectedly, the other could be left with financial strain. This is a good time to review your policy and make sure both of you have adequate protection.
Some couples choose to have joint life cover, which can be a more affordable way to cover both partners. Though you may prefer to have separate policies for more flexibility.
Either way, updating your cover can give you both peace of mind that you won’t face unnecessary financial stress if the worst happens.
2. When you have a child
Probably one of the biggest reasons to review your life insurance is when you have a baby. In an instant, you’ve got new expenses to focus on, such as childcare, education, and general day-to-day costs. Even as they grow, your responsibilities as a parent continue to grow, which is why your cover should grow with your family.
That often means increasing your cover amount so there’s enough to support your children if you’re no longer around. It’s not just for working parents, either. If you are a stay-at-home parent, you also contribute hugely to the household.
3. When you buy a home
Buying a home is one of the biggest financial commitments most of us will make. So, if something were to happen to you, your partner or family could struggle to keep up with mortgage repayments.
Ideally, you want your life insurance payout to be able to cover what’s owed. Many homeowners choose mortgage life insurance so that their family can use the payout to clear the debt and keep the home.
If you’ve recently moved or remortgaged, it’s a good time to revisit your cover and make sure it matches your newfound situation.
4. When your income or career changes
A new job, pay rise, or career move – they often bring a lifestyle change. If you’re earning more, it might make sense to increase your cover to match your higher income and living costs.
On the other hand, if you’ve become self-employed, you no longer have employer benefits like death-in-service cover, which makes having your own life insurance even more important.
Even if you do have death-in-service benefits, it’s worth remembering that they typically end when you leave the job. Having your own policy will ensure your protection stays with you wherever your career takes you.
5. When major life circumstances change
Not every change fits neatly into a category. There are some moments when you may need to change beneficiaries, reduce your cover, or take out a new policy in your own name. Such situations can include:
- Divorce or separation
- Caring for elderly parents or relatives
- Paying off major debts or becoming mortgage-free
When you first take out a policy, you should keep in mind that you may need to adjust your cover over time.
How often should you review your policy?
Even if none of these major events have happened recently, it’s still a good idea to review your life insurance every few years. Failing to do so could be the difference between your family having just enough to get by to being financially comfortable.
When you take a look at your policy, ask yourself:
- Would the current payout still cover my family’s main expenses and debts?
- Have my household costs, income, or dependents changed since I last updated it?
- Do I have any new financial commitments that aren’t covered?
- Am I paying for more cover than I actually need?
- Do I still have a policy through work?
A quick check can help you make sure you’re not overpaying for unnecessary cover, or leaving your family under-protected.
If it’s been a while since you checked your policy, now’s the perfect time to make sure it still fits your life today. A small review now could make a big difference to your family’s peace of mind later.
