Increasing Your Life Insurance Coverage

There are specific events during your life when you will need to reassess your situation and increase the amount of life insurance coverage to suit your new needs.

This page:

Advises when to increase the amount of insurance coverage .

Suggests a reasonable adjustment for each circumstance.

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Once again, the situations for increasing your life insurance coverage are:

getting married,
the birth of a child, and
being promoted.

Just married

As a newlywed, you might be considering a life insurance policy with your spouse as the beneficiary. If you are still living a pretty independent life - both you and your spouse are employed and you have no children, debt, or mortgage payments, insurance is usually unnecessary.

If your spouse doesn't work, your death might prove to be a financial burden. If this is the case, we suggest purchasing a life insurance policy with a death benefit covering your funeral expenses and a sum equal to your annual salary.

A policy with a small death benefit will not be too expensive and you can rest assured your death will not be financially devastating to your spouse. If you and your spouse decided to take advantage of the great interest rates by taking out a loan for a house, your death benefit should include the remainder of the mortgage as well as any other debt in your name. Your premiums will be higher for this increase in coverage, but your death will not result in more debt and the loss of your home.

Expecting a baby

As a parent-to-be you need to reevaluate your insurance needs. It is especially important to purchase a life insurance policy or increase the coverage amount in single-income families, but dual income families need to make adjustments too.

Raising a child is a costly endeavor, which makes insurance more crucial. With the addition of a child, you should increase your death benefit to include your salary for a number of years, the cost of day care and college, and other household expenses you incur within a year. If you cannot increase your policy by this much, raise the coverage as much as you can afford.

A job promotion!

Getting a raise should prompt an increase in life insurance coverage too. Your family will enjoy a higher quality of living that might be jeopardized if you fail to revise your policy.

Anytime your salary is adjusted you should amend your policy. In the event of your death, your family will be able to continue to live comfortably instead of scrambling to meet the loss of your extra salary.