So You Bought Life Insurance. Do You Ever Have to Think About It Again?

Buying life insurance is important. Without it, loved ones could be left with too little money in their checking accounts to cover the bills if a person dies and stops contributing income or support to a household. 

It's not something that's fun to buy, though. After all, it can take time to shop around for a policy, getting covered could necessitate a medical exam, and it's also just not very enjoyable to think about dying. 

Many people who buy life insurance are happy to check this task off their to-do list and are hopeful they'll never have to think about it again. Unfortunately, getting covered isn't necessarily a once-and-done task. There are a few situations where it may be necessary to think about this coverage again after buying a policy.

When life changes happen

It's important to consider whether life insurance coverage should change when major life events happen. For example, having a baby could be a good reason to get more coverage. It costs an estimated $310,605 to raise a child from birth to age 18, and that's not even considering the costs of higher education. Parents who want to make sure their children are provided for should seriously consider getting more coverage. 

Other life changes could also necessitate getting more coverage, such as becoming the primary caregiver of a disabled or aging relative, having a spouse quit a job to become a stay-at-home parent, or taking on a new major financial obligation like a mortgage loan. Any new financial or personal obligation could leave loved ones without the funds they need in an untimely death unless life insurance is increased accordingly. 

When a beneficiary needs to change

When buying life insurance, it's necessary to name one or more beneficiaries. These are the people (or entities) who will receive a death benefit if the policyholder passes away.

Sometimes, the designated beneficiary needs to change. This could happen in case of marriage, divorce, having a child or a new grandchild, or the policyholder simply changing their mind about where the money should go.

It does not matter what an insured person specifies in their will about who should inherit their property -- this will not affect what happens to a life insurance death benefit. The beneficiary must be changed so the right person(s) receives the funds. Do not wait to make this change whenever it is necessary. 

When a term policy is coming to an end

Finally, if a term life insurance policy is coming to an end, the policyholder will need to make a decision about what to do. Term policies are in effect for a designated period of time, such as 20 or 30 years. At the end of the term, the coverage will end unless action is taken.

Most people get a term policy because they know they will only need coverage for a limited period. But that's not the case in every situation. If a term policy ends and someone discovers they still need protection, they'll have to contact their life insurer to see what their options are for extending coverage. 

All of this means buying life insurance isn't a once-and-done thing. Anyone who is insured should make sure to modify their policy when necessary to ensure their loved ones remain protected at all times.