When do I need to think about life insurance?

Life insurance is a crucial part of financial planning, providing peace of mind and financial security for your loved ones. But when should you consider adjusting your life insurance coverage? Here are some key life moments when it might be important to review your policy.
 

Starting a family 

When you have your first child, it’s a significant milestone that often prompts the need for life insurance. Ensuring your family is financially secure in the event of your untimely death may become a priority.
 

Buying a home

Purchasing a home is another critical moment. A mortgage is a long-term financial commitment, and life insurance can help cover this debt if something happens to you, ensuring your family can stay in their home while limiting the financial burden.  
 

Career changes

A new job or a significant pay rise may also be a good time to reassess your life insurance needs. Higher income can often mean higher living standards and expenses, which could be reflected in your coverage. Conversely, a reduction in your hours or take home pay, might mean the need to reduce your expenses by reducing your cover.
 

Major investments 

Making large investments, such as starting a business or investing in property, can increase your financial responsibilities. Life insurance can ensure these obligations are not a financial burden on your family if you are no longer around.
 

Changing family

Family dynamics can change due to events like divorce, remarriage, or blending families. Each of these situations would likely impact your financial commitments and potentially your life insurance needs.
 

Retirement

As you approach retirement, your financial situation changes. You might have fewer dependents, less debt, and lower expenses, which could mean you need less life insurance. Premiums also tend to increase significantly as we get older, which can start to strain the hip pocket. You might consider reducing your cover or removing cover you no longer need. 

Life insurance is not ‘set and forget’. By reviewing your policy at key moments throughout your life, you can ensure your cover continues to meet your needs and provides the necessary protection for your loved ones.

If you need help to determine how much cover would be appropriate for your situation, there are tools available such as the MoneySmart Life insurance calculator, which can help you estimate how much cover you might need for your circumstances.

If you would like a more detailed, personalised plan you can reach out to a financial adviser who can recommend strategies for you.

It’s also a good idea to review your insurance at least annually, to ensure that it continues meeting your needs and your changing circumstances. And if for any reason you have issues paying your insurance premiums, reach out to us to discuss your affordability options before cancelling your cover or letting it lapse, which might leave you and your family under or uninsured.