3 reasons why you may need to increase your insurance coverage

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The deadly benefits that once made sense may become too small over time.

Key points

  • Life insurance aims to protect loved ones.
  • In some cases, changes in life require greater compensation in the event of death.
  • There are several reasons why buying more insurance coverage may be necessary.

Life insurance is important for most people. Policies can pay death benefits after the covered person dies. Family members can rely on this money to pay the bills that the deceased used to cover, or to pay for services provided by the deceased.

When buying a policy, the policyholder must decide how large the death benefit should be. And in some cases, the amount of death benefit will have to be increased after the initial purchase of the policy. Here are three situations when increasing this coverage may become important.

1. Marriage

Most people make joint financial commitments when they get married. This can mean shared debt, such as mortgages or car loans. In addition, people get used to a certain standard of living based on their total income with their spouse.

When someone new depends on the income of the policyholder, this is a clear situation where more life insurance is needed. Buying additional coverage could allow the surviving spouse to stay in a shared home, pay off a shared debt, and continue living the lifestyle the couple enjoyed after they married and combined finances.

2. Assuming new financial responsibilities

When a person dies, his financial responsibilities do not necessarily die with him.

If a person has borrowed a lot of money, for example, creditors can sue his or her property to try to recover unpaid funds if the debt is not repaid at death. Or if someone starts paying nursing home fees for elderly parents, the nursing home will not just stop charging for the death of the child.

No one wants all his property to go to creditors and no one wants to leave his obligations unfulfilled. As a result, it’s a good idea to increase your life insurance when you make new commitments.

3. To have a child

Having a child means incurring significant additional costs. Children are very expensive to raise to adulthood, and the cost of educating children can be astronomical. Obviously, every parent wants to make sure that their child is insured and has money available to cover the child’s needs. This is true even if the parent passes.

Since adding a child means adding a new — and expensive addict, it almost always makes sense to buy significantly more life insurance once the baby appears on the scene. This also applies to parents who stay at home. Childcare and other services that start to be provided after a baby arrives cost a small fortune and someone may have to be paid to provide this care in the event of a parent’s untimely death.

These are just three of the many examples of situations where you may need to increase your life insurance coverage. In principle, every person with life insurance usually has to buy more after major life changes that leave others more dependent on the covered person. It is much better to get this coverage as soon as possible than to die without it, so quick action after a change of circumstances is usually the best course of action.

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