Thinking about life insurance can be tough, causing many people to procrastinate or even avoid getting covered altogether. However, even if you have taken out a policy, it might not be any easier or more enjoyable to think about these things. You may want to “set it and forget it,” only remembering your policy when it shows up on your bank statement.
As much as you might hate thinking about your life insurance needs, there are times when it may make sense to reconsider the details. Often, changes to your work situation might also mean that changes are needed to your policy. Here are three times in your career when you might want to update your life insurance.
Getting a promotion
Moving up the career ladder is a big step, one that often comes with a raise in pay. Earning more money may also mean lifestyle changes for you and your family. Whether these are big (buying a new home) or small (adding a few luxuries to the grocery trolley), you may want to rethink your life insurance benefit amount after a promotion.
The amount of cover you selected when you first took out a policy may not match your current lifestyle. This may be particularly true if you’ve received multiple pay rises over the years and upgraded your home or car, enrolled the kids in private school or simply enjoy a comfortable standard of living.
A benefit that was carefully chosen years ago (or guessed at!) may no longer be enough. Receiving a promotion might be a good time to look over your current expenses and budget to decide if increasing your cover is the right move.
Taking a career pause
There may be times when you or your partner might need to step away from their job. Parents often do this when they’re expecting a new baby or after adopting a child, but needing to care for an ill or aging family member is another common reason. It may be tempting to cancel a life insurance policy to save money, but this could be a risky move.
Even though stay-at-home parents and unpaid caregivers don’t bring home a paycheck, they do contribute to the household finances. Just think of all the jobs they potentially do: childcare, attending to medical needs, housekeeping, cooking and so much more. If they weren’t able or there to perform these tasks, it could potentially be very expensive to hire outside help.
And, if your career pause is temporary, you may find it harder or more expensive to get covered again in the future. Factors such as age and health can affect life insurance premiums. Replacing a cancelled policy could potentially be more expensive due to your age. You might also be subject to exclusions, because of a health issue that could now be considered a pre-existing condition.
Before cancelling your life insurance policy, consider how this might impact your family’s financial future. It may make more sense to temporarily decrease your cover amount to save on premiums.
Retiring is a major life milestone—one that may signal other big changes. These might include paying off a mortgage, downsizing your home or traveling more. Now may be a good time to update your life insurance policy to match this exciting time in your life.
Life insurance may not be necessary for some people after they’ve retired. This could be true for you if you’ve paid off large debts (like your house or cars) and no one relies on you financially (such as your children, grandchildren or other family members). You may decide to cancel your policy, or decrease the benefit amount to help cover funeral costs when the time comes.
However, leaving your life insurance cover as is, or even increasing the benefit amount, might also make sense for some people. A life insurance policy could act as a form of inheritance by helping pay for school fees, university tuition, a house deposit or anything else your beneficiary may need.
Think about your policy today
No matter what stage your career is at, life insurance could be an important way to help protect your financial future. Momentum Life staff are happy to help, whether you’re looking for a new policy or updating an existing one.
Disclaimer: The information provided in this article and any possible advice of Momentum Life staff is of general nature, and does not take into account your personal situation. You should consider whether the information is appropriate to your needs or seek professional advice, where necessary.
All product information is correct at the time this article was published. For current product information, please visit the Momentum Life website.