Hello There are three big events that typically prompt people to purchase life insurance: Marriage, buying a home, and having children. All three are important life milestones, leading people to think about and plan for their future.
It’s really no surprise that these events spark a desire to put some financial protection in place, just in case the worst happens.
But there are other times in life when it may be time to reconsider your life insurance needs. Whether you’ve made changes at work, additions at home or you are starting to downsize, the amount of life insurance cover you hold may need an update.
Here are five times to consider making changes to your policy.
1. Renovating the House
Increasing housing prices in Australia are leading more people to choose renovations over moving. Rather than changing neighbourhoods in search of a better floorplan, families are instead opting to upgrade their existing homes. If you are one of such, we recommend you read this step-by-step guide to filing a home insurance claim, so as to prepare yourself if anything goes wrong.
A home remodel can add value to a property that could in turn change your life insurance needs. Paying off a major renovation often takes time, whether it was funded through refinancing an existing mortgage, taking out a personal loan or using a credit card. This may mean increasing the benefit amount of your policy to allow your family to pay off or down the debt, if the worst were to happen to you.
2. When the Kids Start High School
We’ve mentioned before that starting a family is a big reason for many to take out life insurance. The desire to help protect their family’s financial future leads new parents to purchase what may be their first policy. But as your children grow, you may want to reassess the cover you have. This is why most insurance agents recommend term life insurance for parents.
Parents often consider the costs of a child’s education when selecting the amount of life insurance cover they take out. Paying for school fees or setting aside money for university are commonly taken into account.
However, if you purchased when your children were young (or before you had them), you may have simply taken your best guess at how much money would be needed to cover school costs. Once the kids reach high school age, it may be a good idea to review this number.
Now that you’ve selected the school or schools your children will attend, you can better estimate the cost of their education. You may also have a better idea of whether your children are likely to attend university, and which ones they’re working towards. You might find that more life insurance cover is needed to help pay these fees, should the unthinkable occur.
3. Getting a Promotion
Making gains in your career is a big occasion. Your top priority may be to celebrate (and rightly so!), but after you’ve toasted to your success, it may be time to review your life insurance policy.
If you purchased when you first started your career, the lifestyle you lead then may be vastly different to what it is now. People tend to acquire assets as they climb the career ladder, often trading up for a better car or house, or investing in multiple properties.
The benefit level chosen when you were younger may no longer be enough to make a sizable dent in the mortgage or car payment if you were no longer around or able to provide for your family. It’s also likely that the insurance cover provided with your superannuation may no longer be enough to match your changing salary and lifestyle.