Life Changes, and So Should Your Life Insurance Policy?

Life is full of changes, so your life insurance policy should be full of changes too. Some minor life changes don’t warrant a change in your life insurance policy, like dying your hair a different colour or finding a new favourite song. But some, more major changes that you encounter in your life, do.

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Your Options When Reassessing Your Life Insurance Policy

It’s not enough to just know when you should reassess, it’s also important to know what that reassessment should look like. Here’s what you should consider when taking another look at your life insurance policy:

Extend same policy for longer
Move to a permanent life policy instead of a temporary one
Purchase a new policy with different rates and coverages
Drop your policy by either not extending it when it comes to term, or by cashing it out or selling it before the term
Changing your beneficiary

When to Reassess Your Life Insurance Policy?

The following major life changes are reasons to look into changing your life insurance policy since they raise new considerations for your coverage:

Marriage: Your spouse is someone who you will want to be looked after in the event of your passing. So, after a new marriage, it’s a good idea to look into changing your life insurance policy to accommodate your new spouse.
Having Kids: Children will also need to be considered in your life insurance policy since you will want to ensure that they are looked after.
Buying a Home (or other added financial obligations): Purchasing a house is a huge financial commitment that will change the state of your finances. Such changes may warrant re-evaluating your life insurance policy to factor in your new home and new budget. Other financial obligations that may warrant a policy assessment would be buying a new car or having a large renovation.
Getting Divorced: Divorce may leave you with one less person to consider in the event of your death. Or perhaps you will still want to have your ex looked after but to a lesser extent. There are also financial changes that come with a divorce that warrant a reassessment of your life insurance coverage.
Spouse’s Death: In the unfortunate event of your spouse’s death, your life insurance needs will change. Your finances will be subject to fluctuation, and your spouse will no longer need to be included in your policy.
Starting a New Job/Business Venture: Your new career will likely come with a different salary than your previous one. You may have more or less expendable money. Regardless of which is the case, your life insurance coverage should be re-evaluated. Furthermore, your life insurance coverage may have been offered by your previous employer so you will lose it when switching jobs.
Approaching Retirement: Retirement is another major financial and lifestyle change that is cause for taking another look at your life insurance policy.
Improving Health: If your reason for taking out a life insurance policy in the first place was due to health concerns that you no longer have, then it may be worth considering dropping your plan. Or at least modify it.
You’re Approaching the End of Your Policy: Most life insurance plans have between a 5 and 30-year limit. When reaching the end of yours, it’s good to have an idea of how you wish to proceed when your policy expires.

It’s not a bad idea to assess your policy every few years, just in case of any life changes such as this occurring. Always better to be safe than sorry.

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Margaret Huntley Margaret Huntley is a creative writing and philosophy student at Western University. She has been working as a freelance writer for over two years and has written about everything from insurance, to poker, to health and wellness for international businesses.