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Evaluating your life insurance needs doesn’t end when you sign on the dotted line for your first policy. As your responsibilities change, so should your policy. There are several questions you should ask yourself periodically to be sure you have adequate coverage for your loved ones.

Evaluating Your Life Insurance Needs"What are the personal and financial assets that I need to protect?"

"If I were to suddenly pass away, how much money would my loved ones need to maintain their lifestyle?"

“What debts do I have that would need to be paid off if I were to die tomorrow?”

“What are the upcoming expenses (weddings, college, etc.)my family would be responsible to cover even if I were not here?”

“How close am I to retirement?”

As your family grows, your responsibilities change. If you ask yourself these questions annually, they may change from year to year. It's critical to recognize the change in your assets and responsibilities so you can adjust your term life insurance coverage accordingly.

There is no one-size-fits-all life insurance policy, everyone’s needs are different and constantly changing. When you were 30, you may have secured a 20-year term policy.

Today, a 10-year term might be more appropriate. Many individuals choose to have their life insurance policy match their mortgage, so if they have a 30-year mortgage, they will choose a 30-year term life policy to protect the life of the loan.

The amount you pay for term life protection depends on your health, age, the policy and the term. Rates vary among insurance companies, so you can shop and compare quotes from multiple companies. The cost of the same policy may vary by hundreds of dollars among different insurance companies.

One major pitfall in life insurance is purchasing too much. Your life insurance should be an income replacement, not a promotion. Financial planners recommend a policy amount at least equal to 6-10 times your annual gross income.

As your needs change, so will your rates, so it’s important to shop around. Most insurance companies rate your life insurance rates six months before your birthday. This is referred to as "Age Nearest". This half-year price increase can add up over a 20-year term policy, so it’s best to shop around while you’re young to help you save on term life insurance in the long run.

Buying a life insurance policy when you’re young is the best way to lock in the protection you need at a low price, so you can avoid paying substantially more when you are older, and a shorter-term policy expires.


By Matt Reynolds - Google+

Posted 7:00 AM  View Comments

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6801 Dixie Hwy Suite 232
Louisville, KY 40258
Phone: 502-933-2255
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