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It can be overwhelming to think of all the financial things you need in your life to be able to comfortably afford your life. You need a well-funded retirement plan, a diversified investment portfolio, the ability to pay off high-interest debt and more. But for millions of Americans, it’s not just their own lives they have to think about; it’s also the lives of their family — spouse, kids and maybe even boomer parents. Chances are these people rely on your income.
When you’re helping to support a family, it’s critical that you have life insurance, which provides financial protection for your loved ones if you die. Your beneficiaries can use the death benefit payout to cover many expenses, including funeral and burial costs, medical bills, mortgage payments, tuition and more, according to information from Progressive.
Once you understand the importance of life insurance and get a policy, you may be wondering, “Is this policy good enough? Is it right not only for my family’s needs should I pass, but also for our needs while I’m alive?”
Here are six key signs you may need better life insurance.
Also, here are three reasons to re-evaluate your life insurance once your net worth reaches $1 million.
Lack of Living Benefits
The life insurance industry has greatly evolved over the years and now offers policies that you don’t have to die to use.
“Living benefits allow you to access your death benefits while you’re alive for qualifying events such as cancer, stroke, heart attack or Alzheimer’s— even if you have no cash value,” saidHoang Anh Le, financial educator, life insurance with living benefits expert, and founder at Luxury under Budget.
“If your policy only pays out upon death, it’s a sign you need to get your policy reviewed,” Anh Le said. “This feature can provide crucial financial support during severe health issues, giving many the financial resources needed to fight against illnesses.”
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Major Life Changes
Did you just get married? Have a kid? Buy a home? Any of these major life changes could necessitate an increase in life insurance coverage.
“These milestones mean added responsibilities and dependents who rely on your financial support, making it crucial to ensure they are adequately protected,” Anh Le said.
Increase in Debt
If you’re in a situation where you’re taking on a lot of debt — such as when taking out student loans or a mortgage — you may benefit from more life insurance coverage.
“Ensuring these debts are paid off in the event of your passing can relieve your loved ones from financial burdens,” Anh Le said.
Income Growth
“As your income increases, so do your lifestyle and financial responsibilities,” Anh Le said. “Ensuring your life insurance matches your current income level can help maintain your family’s standard of living if something happens to you.”
Employer-Provided Insurance
Your employer may offer life insurance as a benefit. That’s great; but relying solely on this policy can be risky.
“It may not be sufficient and you could lose it if you change jobs or get laid off,” Anh Le said. “Having an individual policy provides more stability and adequate coverage.’
Inadequate Coverage
Our financial needs change over time, and often responsibilities increase. You may have started out your life insurance journey with a policy that covers only the very basics. You may find that this coverage simply isn’t sufficient.
“Reassessing and adjusting your policy to match your current financial situation is crucial,” Anh Le said.
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