Changing Your Life Insurance Coverage

There are specific events during your life when you will need to reassess your situation and adjust the amount of life insurance coverage to suit your new needs. Although we suggest you look over your policy every year and make minor adjustments, some situations should trigger large adjustments to your amount of coverage.

This page:

Advises when to adjust the amount of insurance coverage

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Essentially, when you are deciding how much and what type of life insurance you want to purchase, you are asking yourself what is your life worth? Since every individual's circumstances are slightly different, we can't give an answer that is true for everyone. Instead, your unique circumstances determine whether you have a need for life insurance or not.

What's your motive?

The most common motive for purchasing life insurance is to provide financial security to your dependents in the event of your death.

We use the word dependents, because often other relatives or people rely upon you and your income for survival. Anyone – be it your spouse, children, parents or someone else- who benefits from your salary and who, without it, would have a difficult time living in the comfort they do now should be counted as a dependent.

Anytime this number increases or decreases, the death benefit of your life insurance policy should be adjusted. Of course, there are other factors, such as:

debts,
college expenses, and
other special needs

These play an important role in deciding the amount and type of policy you should purchase. But what circumstances call for more or less insurance? We'll, we're here to tell you.

We've divided the events that should cause you to run to your life insurance company demanding a change in coverage into two sections:

 when to increase your amount of insurance coverage:
     marriage
     salary raise
     birth of a child


 when to decrease your amount of insurance coverage:
     single and independent
     recently divorced
     finally retired

Healthy, wealthy, and wise?

If you and your family are wealthy, you may assume life insurance is an unneeded commodity. If, however, your estate is large enough to require you to pay estate tax at the time of your death, you will need to purchase a life insurance policy. Your family needs liquid assets to cover these costs and, since, life insurance policies provide immediate proceeds, having a policy is the easiest way to assure your family is not burdened with these extra costs.