Most Americans tuck their life insurance policies away after purchasing them. These papers rarely come out of their storage spots for review. However, it is important for all Americans to review these documents periodically. The reason for this is because life’s changes may require alterations in life insurance coverage. When people get married, have a baby or buy a house, they must change their policies. Even a change in salary is enough to warrant a review. When main earners start making more money, their families become accustomed to a different style of living. They may upgrade their cars and take on more monthly financial obligations. The sudden death of a main earner results in financial hardship for survivors who are left with an income that is only enough to cover a portion of necessary expenses.
When people get married, they have to change their life insurance policies to accommodate a new spouse’s needs. Having a baby may require even more life insurance. As children grow, their needs become more expensive. A tiny infant may only need medical care and living necessities, but teenagers need money for college, braces and even cars. Student loans may not always be an option, so it is a good idea for parents to purchase enough life insurance to cover a significant portion of the cost of future college tuition.
If a year passes without any major life changes, it is still a good idea to review coverage. Debts often change from one year to the next, so it is important to keep life insurance provisions balanced with current debts. For example, a person who did not experience major life changes may take out a loan to pay yearly income tax obligations. If the amount is more than $3,000, the change results in a higher amount of personal debt. Credit cards and store charge cards have balances that may also change considerably. Many people take advantage of refinancing opportunities. If this is the case, make sure current life insurance provisions are enough to take care of the new mortgage balance.
Even single people need to review their life insurance periodically. Funeral costs are constantly on the rise, and the demand for burial plots also increases each year. To make necessary changes, it is important to be aware of the current average funeral costs. Funeral homes are required by law to provide a current price list, so call a local establishment to get a better idea of how much to expect to pay. Single people should also make sure their life insurance policies provide enough money to cover personal medical bills and debts.
While reviewing the policy, make sure the beneficiary information is still accurate. For answers to questions about adequate provisions, discuss these issues with an agent.
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