Are You Underinsured? 5 Signs It’s Time to Reevaluate Your Life Insurance
If you have dependents—or even just loved ones you want to protect—life insurance is more than a safety net. It’s a critical tool that ensures your income doesn’t vanish without a plan, potentially leaving your family to face financial hardship during an already difficult time.
But how much life insurance is enough?
The answer depends on your life stage, financial responsibilities, and long-term goals. If any of the following apply to you, it might be time to revisit your coverage.
1. Your Only Life Insurance Is Through Your Employer
Group life insurance through your job is a great starting point—but it’s rarely sufficient. Employer-sponsored policies often cover just one or two times your annual salary, which likely falls short of what your family would need to cover debts, daily expenses, or future costs like college tuition.
What’s more, this coverage is typically tied to your job. If you change employers, retire, or get laid off, that policy may end—leaving you unprotected.
An individual life insurance policy not only gives you more control but also allows access to permanent life insurance options with living benefits you can use during your lifetime.
2. Your Income Has Increased
A raise or career advancement is great news—but it can also mean you’re now underinsured. As your income grows, so do your financial commitments: a larger home, lifestyle upgrades, family vacations, or tuition savings. If your life insurance policy hasn’t kept pace with your earnings, your loved ones might be left trying to maintain a lifestyle that no longer fits the available resources.
3. Your Stay-at-Home Spouse Isn’t Covered
Life insurance isn’t just for breadwinners. Stay-at-home parents provide essential services—childcare, housekeeping, scheduling, and more—that would be costly to replace. If your spouse stays home and doesn’t have a policy, your family could face unexpected financial burdens should the worst happen.
Need proof? Watch the Virgen family’s Real Life Story. Life insurance for Teresa, a stay-at-home mom, helped prevent them from losing their home after tragedy struck. Without that policy, the outcome would’ve been devastating.
4. You Had a Child
Children are a joy—and a major financial responsibility. In 2023, the average cost of raising a child surpassed $21,000 per year, and that doesn’t include college. If you recently became a parent or added another child to your family, it’s time to update your policy.
The goal? Ensure your coverage is sufficient to provide for your child’s long-term needs: housing, food, education, and care—especially if you’re the sole income provider.
5. You Bought a New Home
Your mortgage is likely one of your family’s biggest monthly expenses. If you’ve recently upgraded or purchased a home, your previous life insurance policy might not be enough to cover that new debt.
The last thing you’d want is for your family to face the added stress of a forced move in the wake of a loss. An updated policy can offer them stability and peace of mind.
Don’t Leave Your Coverage to Chance
Determining how much life insurance you need may feel overwhelming—but it doesn’t have to be. Start with Life Happens’ Life Insurance Needs Calculator, a free tool designed to help you estimate your ideal coverage.
A few thoughtful steps today can mean financial security for your loved ones for years to come.
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