Having kids. Starting a new career. Getting married. Buying a home. Trends today indicate that many Americans are delaying some of life's major events. They're also putting off retirement and working longer. For these reasons and more, you need to ensure that your life insurance needs are keeping up with you.
How much life insurance do I need? Unfortunately, many Americans don't fully understand the risks they take by not having adequate life insurance coverage, and 50 percent aren't even sure if they have the right level, according to the Life Insurance Marketing Research Association (LIMRA). The fact is, your life insurance needs can change anywhere between seven and 10 times during your lifetime, which is why it's so critical to have an annual policy review to ensure that you have enough coverage when you need it.
Life insurance checkup
As part of an annual life insurance checkup, an agent will typically first review your existing policies and limits with you (including any policies you may have with work) and then conduct a more detailed life needs questionnaire or checklist for a better understanding of how your life situations might have changed. Questions may include a review of changes in your financial and retirement goals and changes in assets or debts, and whether you've purchased a new home, added to your family (new birth or adoption), or had a job change or a new marriage. All these life events can be substantial triggers to evaluate your coverage.
Some agents also use a life insurance calculator with a questionnaire or checklist to get a general estimate of the dollar amount of life insurance you may need based on your analysis. Together, these tools allow the agent to identify coverage gaps and recommend changes and/or specific policies based on the assessment.
Working longer & retirement planning
Two common mistakes many people make with working longer is thinking that the life insurance policy at work will be there when they retire or that by the time they leave, they won't need life insurance. What you need to know when planning for retirement is that the life insurance provided by your company's benefits plan will remain at the desk when you retire. So if you plan on working until age 65 (or longer) and don't have life insurance outside your workplace, your coverage will end when you leave. This means you'll be looking for coverage independently, with new premiums based on your current age and health insurability. So no matter how long you plan on working, it's always a good idea to secure a life insurance policy outside your job and to buy as much as you can comfortably afford.
Later-in-life debts
Today, the debt many people carry later in life is different from a few decades ago. With more middle-aged people carrying substantial student loan debt well into their 40s and 50s, and 30 percent of homeowners over the age of 65 still carrying a mortgage, debts are lingering longer. For these reasons, you may not want to wait to increase your policy limits or replace a close-to-expiring term policy. It's also a good idea to ask your agent about policy riders or endorsements that can be added to new and existing term policies. Some endorsements or riders will allow you to affordably purchase additional life insurance at specific intervals (every so many years or at a certain age) and can help your insurance keep pace with your life changes.
Life has changed over the past few decades. Make sure your life insurance is changing with you by meeting annually with a qualified life insurance professional.
For more information on types of life insurance, visit our learning center.
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