You may think of life insurance as something you obtain and then don’t look at again until it’s time to make a claim. And while you certainly can treat it that way, doing so may, over time, leave you underinsured for a number of reasons. As we tell clients at our life insurance agency in Yuba City, a better strategy is to keep in mind that certain life events can affect how much insurance you need, and to work with your agent to perform a review when those events occur.

Your Evolving Life Insurance Needs

While a regular review of your life insurance policy is a good idea under any conditions, there are four situations where updating your policy can be critical. They are:

  • You get married or divorced
  • You buy a new home
  • You have a child
  • You change employment

Marriage or divorce
Life insurance is a legal contract that specifies who receives the death benefit. The law makes no attempt to determine who “should” receive the benefit based on current marital status. For example, if you are married when you start your policy and your spouse is the beneficiary, that person remains the beneficiary even if you divorce — and even if you subsequently remarry.

It is unfortunate but not at all uncommon that a person dies and his or her death benefit goes to an ex-spouse that they were married to decades ago. You don’t want this to happen to your current spouse, children, or others who you would prefer to receive the benefit.

New home

Your life insurance can help cover the cost of owning a home if you die and your income is lost. If you move from a smaller to a larger home and a larger mortgage, or you buy a second place as your vacation home, it’s important to review your policy and consider whether it will cover your new, larger obligations. You want to be sure that those you leave behind aren’t faced with difficult decisions to make about those properties.

New baby

There are, of course, many financial obligations associated with raising a child, from food, clothing, and shelter to transportation, insurance, and college tuition. Consequently, even before a baby arrives it’s important to review your policy and make changes as appropriate. And be sure you understand the ways in which a minor child can receive the death benefit from a policy. Options like setting up a trust or naming an adult custodian tend to be simpler than naming the child directly as a beneficiary.

Maintaining Adequate Coverage is Key

It may be that the coverage you currently have is sufficient even when one of these four major life changes occurs. But, the only way to know for sure is to talk to your insurance agent. If you’ve got questions about your coverage, don’t hesitate to contact us. At Ernstam Insurance in Yuba City, we’re here to help. Call today at 530-751-1212.

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