Life insurance is crucial for anyone with dependents or loved ones they wish to protect after their passing. It safeguards against potential financial hardships that may affect your family once you're gone. Determining the appropriate amount of life insurance is a significant question that can evolve throughout your lifetime and one that requires careful consideration.
Signs that indicate you may be underinsured:
Reliance on Employer-Provided Coverage:
While having life insurance through your employer is better than no coverage at all, it may not be sufficient. Typically, employer plans offer limited coverage, often equivalent to one or two years' worth of your salary. This may not adequately provide for your family's needs, especially if you have significant debts or aspirations of funding your children's college education. Additionally, employer-based coverage usually hinges on maintaining your job. Should you leave your position for any reason, your coverage will cease. Opting for an individual policy grants access to various life insurance options, including permanent coverage with living benefits that can be utilized during your lifetime.
Increase in Income:
Receiving a raise is undoubtedly a positive development. However, if your current income surpasses what it was when you initially purchased your life insurance policy, you may be underinsured. A higher income tends to come with an associated change in lifestyle, and it is unlikely that your loved ones would want to compromise their living standards in the event of your unexpected departure.
Lack of Life Insurance for Stay-at-Home Spouse:
If your spouse primarily handles household responsibilities and does not have life insurance coverage, it is advisable to consider obtaining a policy for them. Even though they may not contribute financially, their invaluable services such as childcare would need to be compensated for in the event of their absence. The Virgen family’s Real Life Story showcases how critical life insurance was for them, ensuring the family's stability despite Teresa being a stay-at-home mom. For these reasons, securing life insurance for your dependent spouse is crucial to maintain the security of your family's home.
Welcoming a Child into the Family:
Every parent knows that raising a child is a substantial financial commitment. Currently, the average cost of raising a child exceeds $21,000 per year, not counting college expenses. If you have recently become a parent or expanded your family, it is essential to review your life insurance coverage. Ensuring you have adequate coverage to meet your dependents' long-term needs, including their education, shelter, and nutrition until they reach adulthood, becomes increasingly important. Considering the high costs of childcare and the financial vulnerability of single parents, even having one child can significantly increase your life insurance requirements.
Acquiring a New Home:
For any family, paying the mortgage is a pressing financial priority. This becomes even more critical for a newly widowed spouse. If you have purchased a new home since obtaining your life insurance policy, you may need to reassess your coverage to ensure your loved ones can manage the mortgage without difficulty. Moving homes is never easy, particularly when faced with the tragedy of losing a loved one.
Conclusion:
Although determining the appropriate amount of life insurance coverage can be overwhelming as your financial situation evolves, it is within your control to ensure you have sufficient coverage. Utilizing Wonbrella’s resources offers an excellent starting point for assessing your current situation and determining the best route for your Life Insurance needs. Devoting some of your time today can translate into years of financial stability for your family in the future.