5 Signs You May Be Uninsured – Life Happens

If you have dependents — or just loved ones you want to take care of after you die — life insurance is crucial. This coverage helps ensure that your lost income does not translate into tangible financial losses for your family once you are gone.

But how much life insurance is enough? This is a question whose answer can change dramatically over the course of your life, and it is important to answer it correctly.

You may be underinsured with life insurance coverage if…

1. The only insurance coverage on your life is through your employer.

While some types of life insurance are certainly better than no life insurance, if the only coverage you have is through your employer, you may not have enough. These plans generally offer very limited coverage (such as your salary for a year, maybe two), which is unlikely to be enough to meet your family’s needs if you have any significant debt or children whose college education you’re hoping to finance.

Furthermore, life insurance offered through your employer is usually conditional on you keeping that job, so if you leave your position for any reason, the coverage disappears.

Finally, purchasing an individual policy gives you access to different types of life insurance policies, including permanent life insurance, which has a living benefit that you can use while you’re alive.

2. Your income has increased.

Getting a pay raise is always a good thing, but if you’re making much more income today than when you first bought your life insurance policy, you may find yourself underinsured. Higher income usually comes with lifestyle changes associated with it, and learning how to live on less is likely the last thing your loved ones want to do if you leave unexpectedly.

3. Your stay-at-home spouse does not have life insurance.

If your stay-at-home spouse does not have life insurance coverage, you will need to consider getting a policy for her. Even if they don’t have income that needs replacing, they perform valuable services like childcare that would have to be paid for if they were no longer there.

Watch the true life story of the Virgin family to learn how important life insurance is to a family that, fortunately, insured Teresa, a stay-at-home mom. If it weren’t for the insurance, they were sure they would have lost their home.

4. You had a child.

As every parent knows, having a child is expensive – in fact, in 2023, the cost of raising a child will rise. More than $21,000 per year on average. (And this is before you even get to college!)

All of this means that if you are a new parent or have brought an additional child into your family, now is a good time to review your life insurance coverage and make sure you have enough to meet the long-term needs of your dependents, including food, shelter and education, until they reach adulthood. Puberty. Given the high cost of child care (and the precarious financial situation of an underinsured single parent), even one child can increase your life insurance needs significantly.

5. I bought a new house.

Paying off a mortgage is one of the most pressing financial needs of any family — and even more pressing for a recently widowed spouse. If you have purchased a new home since you first took out a life insurance policy, you may find that you need more coverage to help ensure your loved ones can successfully repay that debt. After all, moving is never fun, especially in the face of a tragic loss.

Although it can be difficult to determine how much life insurance coverage you need as your financial situation changes over time, it is also within your power to ensure you have adequate coverage. The Life Happens Life Insurance Needs Calculator is a great starting point for estimating how much coverage you need. Half an hour of work today could translate into years of financial stability in the future.

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button