Your family never wants to have to use your life insurance policy. However, if your death does occur, you want to know the policy is exactly what you need it to be. Because this type of insurance is flexible, you remain in control of all the working components of it while you are alive. That means you need to update it from time-to-time to ensure it matches your needs. To do that, consider these examples.
#1: You Add Someone to Your Family
The birth of a new child in the family can be a big reason to update your life insurance. That is especially true if that child will be an heir or beneficiary on the policy. The key is to be sure that the child’s name is on the policy to ensure he or she receives some of the funds from it. If you adopt a child, this can apply as well.
#2: A Beneficiary Dies
The person you list as a beneficiary on your life insurance policy is the individual who will receive the financial compensation after your death. As a result, you should ensure this person is able to receive those funds. If your beneficiary dies, be sure to update your policy to add a new person. If you do not do this, and you die, the estate of the beneficiary will receive the funds from the policy.
#3: You Get Married or Divorced
A change in this type of scenario is important only if it impacts the way you want to use your life insurance funds. For example, if your life insurance policy names your soon-to-be-ex, you may want to name someone else. If the policy only reflects your children, there may be no need to update it.
#4: You Want to Increase Your Coverage
You may wish to update your life insurance policy if you hope to leave more behind to loved ones. You may find that your family’s living expenses are higher now than they used to be. Or, you may find yourself with a goal of having more to cover your child’s college expenses.
#5: You Want to Convert It to Whole Life
If you have a term life insurance policy, speak to your agent about converting this to a whole life policy. It may offer key benefits including the ability to help you pay for retirement.
Is it time to update your policy? It only takes a call to your agent.
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