Term Life Insurance (Annual)
Should I Increase My Term Life Insurance?
Our lives are constantly changing, and with these changes, we often need to reassess our life insurance coverage. Term life insurance purchased five years ago may not be sufficient to assist in protecting your current financial situation. Marriage, a new child, a new home or the purchase of a business may have occurred in the interim, and now you need to take a second look at your exposure. However, with any reassessment, you also need to recognize that your life insurance rates may have changed as well. Naturally, life insurance rates for new policies generally increase as you age, but you may also qualify for more favorable prices if your health situation or lifestyle has improved or if you are significantly increasing the amount of coverage.
Reassessing Your Financial Situation
Determining whether to increase term life insurance first requires a review of your current financial landscape, with an equally watchful eye on the future. Ask yourself these questions about the changes in your life since you purchased your current policy:
- Has my income increased, and if so, by how much?
- Have I added a spouse, child or other dependent?
- Did I buy a home or a business?
- Have I taken on any other financial obligations?
Take an accurate picture of where you are today financially and determine what your family would need if you were no longer around to help support them. How much would they require, beyond your current savings, in order to meet all of their obligations and still maintain a comfortable lifestyle? Now, you may have a clearer picture about the amount of term life insurance that you need.
Additionally, you should consider future needs. Are there obligations, such as a child's college tuition, that may not be a current expense, but will become important in the future? Any useful assessment cannot ignore these equally important future considerations. For more information, you may wish to consult the article archives of the Insurance Information Institute (www.iii.org).
Benefit Amount Versus Term Duration
Increasing your term life insurance could mean one, or both, of two things: an increase in the benefit amount of your policy or an increase in duration of your coverage. If your financial obligations have grown, an increase in the benefit is probably necessary. However, if you have recently taken on long-term obligations, such as a mortgage or a business loan, or if you foresee obligations that will not become payable until sometime in the future, you may also need to extend the time period covered by your insurance. Typically, both of these types of increases will result in higher life insurance rates.
One common mistake that people often make is to wait until later in life to increase their term life insurance. In general, the older an applicant is, the higher the life insurance costs will be. Thus, it is advisable to reassess your financial situation on a regular basis, such as every three to five years, and adjust your term life insurance, as needed, based on these reassessments. This way, you are more likely to find the most favorable life insurance rates that are available for your age group.
A professional life insurance agent can help you explore your insurance needs and options. Your needs may best be met by adding a supplementary insurance policy to your current coverage. Or it may be advantageous to replace your present term life insurance policy with a new one. Your particular situation may call for converting your term policy to permanent life insurance. A licensed professional is trained in analyzing insurance needs and identifying the particular alternatives they may best meet your unique situation.
If you have decided to increase your term life insurance, get started by filling out the free quote request form on the right hand side of this page.