There is growing awareness and a change in perception regarding insurance and its ability to prepare us for the uncertainties in life. Most people buy a life insurance policy with the expectation that it will last a lifetime. However, due to unforeseen circumstances, the insurance coverage purchased earlier in life may not be adequate as you undergo important life events and milestones that bring new responsibilities and goals. In such cases, you may need to consider getting an additional cover to ensure that your loved ones can lead a comfortable life even when you are not there.
Let’s look at a few life events that signify that you might need to
1. When you get married:
Marriage is a promise of sharing your life together with your significant other and also through financial hardships. If both the spouses are working, the combined household income might increase but so do the overall expenses. You might have aspirations of buying a car or a new home. As a result, to properly support your life partner financially, your life insurance coverage should be assessed and the coverage increased if necessary.
2. Having a child:
Education inflation grows from around 10% to 12% on average. Additionally, if you are considering private education, you should be ready to pay more than that for both; schools and colleges. If you are the sole earner in a family, you need to ensure that your life insurance coverage is enough to address the scholarly needs of your child(ren) without any issues in the event of your demise. If it does not, then it is time for an upgrade.
3. Getting a raise:
If you have received a promotion and now make significantly more than you did earlier and have improved your standard of living, then your expenses would increase as well. It is vital to increase life insurance coverage, especially if you have purchased it when you began earning. In the end, the purpose of life insurance is to replace your income in order to allow your family to remain financially independent even if you are gone.
4. Taking care of your parents:
If you reside with your parents and they require medical care or are dependent on you for their daily needs, it is imperative to increase your policy coverage if you take into consideration their future requirements in your absence. Growing medical costs might make it difficult for your parents to deal with hospital expenses and recovery should they get diagnosed with a critical illness.
Regular income during your working years enables you to create a sizable corpus for your retirement years. However, once you reach the age of seniority, and your children are either married or financially independent, the next step is to protect you and your spouse’s financial future when you retire. Enhancing life insurance coverage should be a priority when your spouse is not earning and relies on you as it allows you to provide for you both even in old age.
Life events such as these are good indicators that you need to reassess your life insurance plan and its coverage. To ensure this, it is vital to commit to a policy that offers flexibility and allows you to modify it according to your needs. After any important life event, it is crucial to revisit your life insurance coverage and increase it accordingly to ensure that you and your loved ones remain financially stable and independent for the perceivable future.