“When to Reevaluate Your Life Insurance Coverage”

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Why Updating Your Life Insurance Policy is Crucial

Life insurance is a vital part of your estate plan, ensuring your loved ones are provided for after your passing. As your circumstances change, so might your life insurance needs. Here are nine reasons to consider updating your life insurance policy.

1. You Want a Different Type of Life Insurance

There are two primary types of life insurance: term and permanent. Term life insurance covers you for a specific period, usually 10 to 30 years, and pays a death benefit if you pass away during that term. Permanent life insurance, on the other hand, lasts your entire life (or up to age 99) and builds cash value that you can borrow from or withdraw. However, it is significantly more expensive than term life insurance.

As you age, you might find permanent life insurance more affordable. Conversely, if permanent life insurance becomes too costly, you could opt for its cash surrender value. Additionally, you might want to add riders to your policy for long-term care or serious illness coverage, which could be standard with other insurers.

2. Your Term Life Insurance Policy Is Expiring

When your term life insurance ends, you’ll need to renew or find a new policy. Not all term policies are renewable, but if yours is, you can renew it annually without a medical exam. However, premiums typically increase with age. If you prefer consistent premiums, compare quotes from various insurers, which usually requires an application and medical exam.

3. Your Family Status Has Changed

Life insurance needs change with your family status. Marriage or having children increases the need for financial protection. Conversely, divorce might reduce your need for coverage unless you have dependents. You may also want to update your beneficiaries to reflect your current wishes.

4. You’re Buying or Paying Off a Home

Purchasing a home is a significant financial commitment. Adequate life insurance ensures your loved ones can keep the family home if you pass away. Once your mortgage is paid off, you might consider reducing your coverage.

5. Your Health Has Changed

Health changes can affect life insurance rates. Improved health might qualify you for lower premiums, while deteriorating health could necessitate higher coverage. Changes in a partner’s or child’s health might also require adjustments to your policy.

6. Your Financial Situation Is Better—or Worse

As your income increases, so might your expenses, necessitating more life insurance. Conversely, financial difficulties might make it crucial to find more affordable coverage. Consider switching from permanent to term life insurance if premiums become unaffordable.

7. Your Employment Changes

Job changes can impact life insurance needs. Losing employer-provided insurance or becoming a stay-at-home parent might require additional coverage. Starting a business could also necessitate life insurance for key partners to ensure financial stability.

8. You’re Nearing Retirement

Approaching retirement is a good time to reassess your life insurance needs. If your partner can access Social Security, pension benefits, or retirement accounts, and your children are independent, you might not need as much coverage.

9. You’re Supporting Aging Parents

As your parents age, they might become financially dependent on you. Increasing your life insurance coverage can ensure they are cared for if you pass away.

The Bottom Line

Factors like health, gender, age, and credit-based insurance scores influence life insurance premiums. Improving your credit score by making timely payments and reducing debt can positively impact your premiums.

For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. We are here to help you with all your mortgage requirements.

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