Events That Change Life Insurance Requirements: Part 1

Need help evaluating your evolving life insurance factors? Numerous changing personal circumstances can alter your financial objectives, making your existing coverage no longer suitable. Reexamining your options whenever major life events transpire or at least every couple of years is wise. Review the key considerations in this two-part series to see which ones apply to you. After determining your latest needs, contact an Alliance Financial Group advisor about life insurance in Ontario to make any necessary adjustments.

Getting Married

Coupling up involves sharing more than your lives. Your union encompasses both member’s financial obligations, and your new mate may rely on your earnings partially or totally. Either person could outlive the other. So both potential survivors need access to enough money to cover the other’s final expenses and debts like car loans and credit card balances. Start by designating each other as beneficiaries of any existing corporate and/or individual life insurance plans. Either spouse without coverage should consider getting it. If one or both of you have kids, also prioritize leaving enough to fund their futures.

If one mate doesn’t earn an income, an individual policy could cover the costs of any household services that person provides. The non-working partner’s premature death might mean that the remaining spouse must pay for replacement services, which could prove quite costly for the widowed mate. If a tragedy strikes when both of you have adequate coverage, either survivor will be able to meet your mutual financial goals.

Buying or Upgrading a House

Moving into a new home of your own is a rewarding accomplishment. But a sizable mortgage that may span 30 years could be a daunting responsibility. Extensive home renovations like adding new rooms or expanding your kitchen can add value along with extra bills. If loans also include expensive new furniture and/or appliances, your bills can mount. Planning ahead can ease that burden. For married couples, either partner’s death would leave the other alone to cover the monthly house payment plus homeowner’s insurance, property taxes, loans for renovations and new furnishings, utilities, maintenance, and unforeseen repairs. But insuring both of your lives can help all survivors remain in their cherished family home. Once you pay off such a large debts as your mortgage, you can consider reducing your coverage.

Starting or Expanding your Family

Having one baby or adopting a child is expensive. Raising multiple youngsters is a tremendous personal and financial responsibility. Supporting your kids may be challenging for two working parents. But what if one or both of you disappeared suddenly? Would enough income be available to cover everything from daycare through college and all the other intervening expenses like food and clothing?

Increasing your life insurance amount with each new family addition can be a fundamental part of your overall estate plan. Benefits would help the surviving parent or appointed guardian handle child-rearing obligations financially. Enabling that person to maintain your kids’ standard of living will help them feel physically secure.

Saving for Your Children’s Educations

Skyrocketing college costs mean you should start saving for your kids’ advanced educations early. Buying permanent life insurance policies for your offspring enables built-in investing vehicles to save for college. Your children will be able to use their growing tax-exempt cash values to pay for their educations when they’re grown.

Managing New Earnings or Employee Benefits

A big raise, promotion, or better job provides exciting opportunities. But spending habits tend to rise along with income growth. If your family lost you and your earnings, you’d want them to continue their upgraded lifestyle. Find out if your employer’s increased compensation includes a higher life insurance amount. If you need more to replace your salary, you might want to acquire individual coverage or boost your existing amount.

When your new employer’s life insurance protection is less than your previous company’s benefits, an individual policy can make up the difference. For an income drop, decreasing your coverage also will reduce your premiums. Term life offers very reasonable rates typically for healthy people. Exchanging multiple policies with one more affordable plan is possible by reaching a milestone coverage amount. Thanks to that discount, you may pay less for a $500,000 policy than a $450,000 one. But make sure that your new plan is effective before cancelling your existing ones.