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How Much Life Insurance Do You Need?

The amount of life insurance that you need depends on where you are in your life. While there’s no question that having life insurance in the first place is the responsible thing to do for you and your family, it’s important to remember that the longer you live, the more your life insurance needs change. Reviewing your policy once every five years is a great way to ensure that your life insurance is keeping up with you. If one or more of the following five milestones have occurred since you initially bought your policy, it may be time for you to change your coverage amount. 

You’ve Married, Divorced or Been Widowed

Just married? Congratulations! Now you have a spouse to consider. And kids, if you plan on having any. Better get a policy if you don’t have one already – or increase your coverage if you do. Divorced or widowed? Since your spouse is no longer in the picture, you may not require as much coverage.

You’ve Just Had a Child or Adopted

The larger your family, the more coverage you’ll require. For every child you have or adopt, you’ll want to make sure you have enough to cover their everyday needs until they turn 18. And if you plan on sending them to college or grad school, you’ll need even more.

You’ve Bought a Home or Upgraded to a Substantially Larger or More Expensive Home

Being a homeowner means greater financial responsibility. Mortgage payments on a home tend to be higher than mortgage payments on an apartment or condo, so an upgrade in housing should also warrant an upgrade in life insurance coverage. Will the policy you have to enable your family to keep the house if something happened to you? If the answer is no, then you need more coverage.

Your Children Have Left the Nest

When your children have all graduated from college and are on their own, your day-to-day expenses tend to diminish considerably – which is why this is usually a good time to reduce your coverage amount. Just make sure your policy is sufficient to protect your spouse and cover any estate taxes that your adult children may face when you’re no longer around.

You’re Approaching the Age of Retirement

If you purchased a term life insurance policy in your thirties or forties, chances are that your term period will be ending around the time you decide to retire. If your retirement funds are ample and your children are no longer dependent on your income, then you may not need to purchase another policy. But if you anticipate having to work full- or part-time after your 65th birthday, you’ll want to make sure you have enough coverage to replace your income when you’re no longer able to support your spouse and any other dependents you might have.
Whether you’re thinking about purchasing life insurance for the first time or changing the coverage amount on an existing policy, it’s always a good idea to consult an insurance professional first. A licensed agent can help you determine how much coverage you need, and help you get your best possible rate.

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