Life Insurance: 5 Sings You Might Be Underinsured
Life insurance is a critical component of financial planning, especially if you have dependents or loved ones who rely on you for support. It ensures that in the event of your passing, your family can maintain their lifestyle and cover essential expenses without facing significant financial strain. But how do you know if you have enough coverage?
Here are five signs that you might be underinsured when it comes to your life insurance:
1. Your Only Coverage is Through Your Employer
Employer-provided life insurance is a great benefit, but it often isn’t enough. Typically, these policies offer limited coverage, often around one or two years’ worth of salary. If your loved ones would need more financial support, such as paying off a mortgage, college expenses, or other debts, relying solely on employer-provided insurance could leave your family vulnerable. Additionally, if you leave your job, you might lose your coverage entirely.
2. Your Income Has Increased
If you’ve had a raise or a significant increase in income since purchasing your life insurance policy, your lifestyle has likely changed as well. This means your current policy may not adequately protect your family’s new financial needs. With an increase in earnings, you may want to consider updating your coverage to reflect your current financial situation and provide your loved ones with the same standard of living.
3. Your Stay-at-Home Spouse Doesn’t Have Coverage
Even if a stay-at-home spouse doesn’t generate income, they contribute significantly to the household. Childcare, household management, and other tasks would need to be paid for in their absence. If your stay-at-home spouse doesn’t have a life insurance policy, the cost of replacing their contributions could create financial stress for your family. A life insurance policy for them ensures that your family is covered.
4. You’ve Had a Child
Bringing a new child into the family is a life-changing event that comes with increased financial responsibility. From daily living expenses to future education costs, children significantly increase the amount of life insurance coverage you need. Ensuring that you have adequate coverage to provide for your children’s needs until they reach adulthood is vital to their financial security.
5. You Purchased a New Home
A mortgage is one of the largest financial commitments most families will take on. If you’ve recently purchased a home, your current life insurance policy might not provide enough coverage to help your family maintain mortgage payments if something happens to you. Updating your coverage to reflect this new financial obligation will help ensure your family can stay in their home, even in your absence.
The Bottom Line for Insurance Agents and Financial Advisors
As life changes, so do the financial needs of your clients. Helping them assess whether they’re underinsured is crucial to safeguarding their families’ futures. Encourage your clients to regularly review their life insurance policies, especially after major life events like a job change, raise, new home, or addition to the family.
If you’re an insurance agent or financial advisor, Regis Financial Partners is here to support you. Our concierge-level services and expertise in underwriting and product selection can help you provide the best possible life insurance solutions for your clients.
Contact us today to discuss how we can partner together to ensure your clients have the protection they need.
