Major life events like getting married, buying a home and having children are times when it may make sense to add to your life insurance coverage.
As you go through life, your life insurance needs may change, with the emphasis shifting away from income replacement.
It often makes sense to keep coverage in place throughout your life.
Many people don’t truly understand the importance of life insurance until the moment they hold their child in their arms for the first time. Life changes in that moment. Your child is looking to you for everything. That baby will look to you for support even if you’re unable to provide it.
Having your first child is a relatively well-known reason to purchase life insurance. But there are many other times in life when your need for life insurance changes. Even if you already have a policy in place, there are moments when you might want to add to or change your coverage to ensure your life insurance keeps up as your life evolves.
6 times you should review your life insurance
1. Getting married
Getting married means committing to sharing your life with someone, but it also means making a financial commitment to help care for and support them. If you were to die, what financial commitments would they still have? Life insurance can help your spouse continue his or her standard of living if something was to happen to you.
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2. Buying a home
Buying a home is a big step for many people because it means being responsible for a mortgage. Life insurance can help your loved ones cover the cost of the mortgage if the family was to lose your income.
3. Starting or adding to your family
Many people take out life insurance or add additional coverage when they first have children or add to their family. That’s because the loss of one parent’s income can be financially devastating for a family. Life insurance can help the family continue financially, covering day-to-day costs, college and even the surviving parent’s retirement some day.
Having enough coverage in place when a parent dies allows the family to focus on what’s important during the grieving process.
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4. Starting a business
There are a number of reasons life insurance plays an important role in business planning. If you have a business partner, life insurance could help him or her buy your share of the business from your surviving family. It could also protect investors, who may be concerned about their investment should something happen to you.
As businesses grow, it’s not uncommon for business owners to add permanent life insurance, which offers a lifetime death benefit and accumulates cash value that you can access for any reason during life. The cash value can become a source of liquidity for the business.1
5. Supporting aging parents
Many people provide financial support to their parents, but even more help them around the house. If something were to happen to you, your parents could suffer.
Getting life insurance with the intention of taking care of your parents financially would give you peace of mind knowing that they will be well cared for even if something were to happen to you.
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6. Taking out student loans
If you co-signed for someone’s private student loans, you will be on the hook if something were to happen to that person.
Since the death of the borrower is considered a default by lenders, you could be responsible for repaying the full balance of the loans. By getting a life insurance policy on the borrower, you protect yourself should something happen to the person you co-signed for.
Evolving life insurance over time
While the life events listed above are times when people often add to their coverage, there are also times when it may make sense to reduce or evolve your coverage. As you get older, it’s possible that you have paid off your mortgage. Perhaps the kids have moved out and can now support themselves. If you have a large term policy, you may no longer need such a large death benefit.
And while there may come a time when it seems like you no longer need coverage, if you have permanent life insurance, your policy can likely play an important role for you for the rest of your life.
As your life evolves, Northwestern Mutual financial advisors can work with you to review where you’re at financially and recommend changes to ensure your financial plan keeps up with your life.
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1Utilizing the cash value through policy loans, surrenders, or cash withdrawals will reduce the death benefit; and may necessitate greater outlay than anticipated and/or result in an unexpected taxable event.