When you reach one of life's major milestones, you want to celebrate the moment and share it with the people you care about the most. What you might not immediately think about is considering a new life insurance policy or adjusting an existing one to protect your loved ones — but that remains just as important.
Because you want to enjoy these life milestones (and many more) and ensure the continued well-being of those who depend on you, getting the right amount of coverage, either through a new insurance policy or by rightsizing your existing one, can provide you peace of mind. Here are five life milestones worth celebrating — and why you might want to consider updating your life insurance when you hit them.
5 Times to Consider a New Life Insurance Policy or Adjust an Existing One
1. You Got Engaged
After you and your significant other decide to start a life together, you'll want to start thinking of how to lay a solid financial foundation for your new union. Because you'll soon be depending on each other for financial stability, this means thinking of every possible outcome — including a premature and unexpected death. A life insurance policy can help ensure that you or your partner is protected from financial devastation.
2. You Bought a Home
A home is probably the biggest purchase you'll ever make. Most of the time, you'll take out a mortgage to finance the home and spread the cost over a couple of decades.
One of the biggest reasons to purchase life insurance is the added liability of carrying a mortgage on your family's home. If you or your partner dies and the other can't manage the mortgage payment alone, carrying enough life insurance to offset the cost of your mortgage could be invaluable — and keep your family in your home for years to come.
3. You Had a Child
According to the U.S. Department of Agriculture, it costs $284,570 to raise a child — and that's before you think about sending your kid off to college. Given the hefty financial burden of raising a child, you might want to consider adding a new insurance policy or adjusting the one you have when you have a child.
4. You Got Promoted
When you've worked hard enough to earn a promotion, you'll want to make sure that your new standard of living is protected by a life insurance policy. Most people who buy a new insurance policy do so to replace their income if they die when people still depend on them. If you've received a significant raise with your latest promotion, you should make sure that your insurance coverage can replace it.
5. You Retired
Retiring from the workforce doesn't necessarily mean you've fulfilled your financial obligations. If your nest egg hasn't quite grown like you'd wanted it to and you still have a mortgage or other debts or if someone still relies on you financially, you'll want to continue carrying your life insurance coverage. Your policy could also help cover your final expenses and help you to leave a financial legacy to your loved ones.
You'll need to consider all your sources of income when you're planning for retirement. One of the most important retirement income streams comes from Social Security. To get the most from your benefits, you'll need to delay drawing on your benefit until you reach your full retirement age — the age at which you're eligible to receive full benefits. You can start collecting Social Security when you turn 62, but every month you delay benefits adds an extra two-thirds of one percentage point — or about 8 percentage points over a year. This can put a little more money toward your retirement, but it also reinforces the need to carry sufficient life insurance so that your loved ones are financially protected.
Each of these life milestones represents an important time to assess your life insurance needs, whether that means purchasing a new policy or adjusting an existing one. As you take time to celebrate these milestones, remember to take the time to protect your loved ones down the road, too.