Does Your Life Insurance Coverage Need Enhancing?
Many employers offer basic life insurance coverage to their employees. Often, the coverage provides a fixed amount to a beneficiary of your choosing should something happen to you. In many cases, you don’t even have to opt-in to the coverage because it’s a standard part of your employment, at no additional cost to you.
However, know that you can increase your level of coverage beyond what your employer automatically affords you. By putting your own money toward a policy, you can make adjustments, like increasing a $30,000 life insurance policy to a $60,000 policy. While increasing life insurance coverage isn’t something as widely discussed as increasing retirement contribution, both impact the financial well-being of you and your loved ones. That’s why it’s important to think critically about how much life insurance you need, and know when it’s time to increase your coverage.
5 Signs You Need to Up Your Life Insurance Coverage
Sign #1: You’re getting married.
Life insurance doesn’t seem like such an important thing when you’re single and taking care of yourself. Should the unspeakable happen, you don’t have any dependents left without financial support. However, when you bring another person into your life and make financial decisions based on a joint income, like buying a house that depends on both of your salaries, life insurance becomes a much more valuable investment. Should something happen to you, your partner now has a security blanket that can provide necessary financial support.
Sign #2: You’re having children.
If your family is growing, it’s time for more life insurance. The size of your life insurance policy should be correlated to the number of dependents you have in your care. Think about first cars, summer camps, the cost of college tuition– all of the things you probably plan on using your salary to cover for each child. In the absence of a salary, a life insurance policy can help lighten the burden of these expenses.
Sign #3: You might support your aging parents.
Could it be time for Mom or Dad to move in with you? Taking on the role of caregiver for a parent can be a significant expense. In this circumstance, your parent is essentially becoming your dependent. Should something happen to you, how would the cost of their living expenses be covered? Life insurance can help fill that gap and provide a parental dependent with greater financial stability.
Sign #4: You’ve started a business.
Before you and your partner launch your new organic hot sauce business, ask each other about life insurance. Increasing your life insurance coverage before opening a business can be a strategic move, because should life’s unimaginable happen to you, your partner can receive money needed to keep things afloat, or use that money to buy your half of the business from your benefactors. If you have investors (let’s say that hot sauce recipe is really out of this world) it can also ease their fears about how the business will go on without you and if their investment will be covered.
Sign #5: You’ve co-signed a student loan.
The thorn in so many of our sides – student loans unfortunately don’t always cease to exist when something happens to the original borrower. If you’ve cosigned a private student loan, you may be on the hook for the remaining balance of the loan if the primary borrower passes away. To anticipate that cost, increase your life insurance upon co-signing. This gives you extra money you can put toward the expense should you find yourself in such a circumstance.
Have more questions about life insurance policies and when to expand your coverage? We can help! Give us a call at 908-598-7800 or reach out to us online.