Life is full of major milestones that prompt people to buy life insurance. From getting married, to buying a home and having children, you may have already sought a way to help protect you and your family’s financial future. However, as life changes, your insurance needs may change too. A policy taken out years ago may no longer be providing as much protection as you’d like.
Updating your life insurance as you go through life could be a smart move, and one that can help shield your loved ones from financial stress. Here are three times to think about updating an existing life insurance policy.
Getting serious in a relationship
People often don’t like to mix love and money. However, as the relationship gets more serious, you may begin to combine finances and assets with your significant other. As you begin to share more as a couple, it might be time to update your life insurance policy to match this growing commitment to each other.
Many couples buy life insurance after they’ve married, but the significance of this life milestone is shifting. Partners are often together for years before tying the knot—if they decide to marry at all. Couples may cohabitate before marriage, and during this time may mingle their bank accounts, buy property together or start sharing other financial assets.
If you’re in a serious romantic relationship, it may be time for your life insurance policy to reflect the life you’re building together. Updating the policy beneficiary to include your significant other may be appropriate, particularly if they rely on your income to help pay the bills.
Growing your family
Having children is a one of the most common motivators when it comes to getting life insurance. New parents naturally want to protect their kids, and guarding their financial future may play a part in this. But what about when the second or third baby—or more!—comes along? As your family grows, your life insurance may need to as well.
Raising a child can be expensive, and some of the costs could multiply as you have more kids. This sometimes comes as a surprise to new parents, who may have made their best guess to begin with when selecting a life insurance benefit amount. If this was the case for you, don’t sweat it! You may be able to update your cover level to better match the needs of your growing family.
Think about how your life insurance benefit might be used, and consider if what you have now is enough for the future. School fees for more than one child, mortgage payments on a larger home or simply wanting your loved ones to maintain their current lifestyle may mean increasing your cover amount. You might also consider optional extras, to add even more peace of mind.
Renovating the house
Home renovations are on the rise in New Zealand as Kiwis seek more space for their growing families, floorplans that better suit their lifestyle or modern upgrades in older houses. These changes may add value to your property, but may also mean a review of your life insurance is in order.
Major renovations are generally paid for with loans, and even smaller jobs may require home owners to borrow a little to finance the work. Home equity loans, a personal line of credit or even credit cards are popular options. However, taking on more debt may mean that your life insurance benefit could use a boost until these loans are paid off.
When you originally purchased life insurance, you might have selected a benefit amount that covered the entire mortgage (or one that would allow your family to make a sizable dent in it). Financing a home reno through a loan or credit card could mean that more money would be needed to achieve this same goal. Increasing your cover, even temporarily until these new loans are paid off, may make sense.
Think about your policy today
No matter what stage of life you’re in, life insurance could be an important way to help protect the future your family is building. Momentum Life staff are here to help at every step of the way, from purchasing a new policy to updating your 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.