I Didn't Increase My Life Insurance Coverage Even Though My Income Doubled. Here's Why

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  • It's important to have a reasonable amount of life insurance coverage.
  • While some people like to add to their coverage as their earnings rise, I'm opting not to.

It's a strategy that made sense for my family.

My husband and I made the decision to get life insurance after having a baby. Prior to that, it wasn't really on our radar, but we decided to meet with a financial advisor who did a great (and necessary) job of convincing us that putting a policy into place was the right thing to do.

When we first started exploring our options for coverage, we were torn between term life insurance and whole life. We liked the idea of getting a whole life policy that would accumulate a cash value. But we also didn't want to overspend on life insurance, and it was clear that term life coverage would be considerably cheaper.

In the end, we decided to go with term life insurance for both of us. But we bought a larger policy for my husband than we bought for me, since his income was higher.

Meanwhile, my income has actually doubled since we put our life insurance policies into place. How so? Now that my kids are older, I have easier and more reliable access to childcare, and that allows me to work more hours during the week.

Also, because my kids are now more self-sufficient, I don't need to spend time every morning brushing their teeth and dressing them, nor do I have to spend time in the evening showering them. Rather, these are things they can do themselves, and that's freed up a lot of time for me to work.

And finally, I'm happy to say that through the years, I've just plain gotten more efficient at my job. I've also accumulated a lot of knowledge on different topics I write about so that while I might've been forced to spend time researching certain subjects years back, these days, I don't have to do all that legwork.

But while I'm certainly happy that my income has increased a lot through the years, I'm not rushing to boost my life insurance coverage. Here's why.

When you already have coverage you're comfortable with

My husband and I always planned to have children, and we knew we needed financial flexibility in that regard to have one of us potentially not work for periods of time. As such, when we took on bigger expenses, like our mortgage, we based them off his income alone.

In fact, even though I work full-time these days, we still pay our essential expenses out of my husband's income. We try to use my income for things like savings, vacations, leisure, and home repairs (so we don't have to dip into said savings).

Because we try to largely live on my husband's salary, we decided to buy a fair amount of life insurance for him. But since we don't rely as heavily on my income, we bought less coverage for me from the start, and we're not planning to increase our coverage anytime soon.

The way we see it, the coverage we have now between both of our policies represents a reasonable sum. And so we don't feel the need to take on higher premium costs by upping my coverage to account for income I earn that we don't really rely on.

Do you need more life insurance?

If the primary breadwinner in your household starts earning more money, and you upgrade your lifestyle based on that, then it could pay to increase your life insurance coverage. But otherwise, you don't need to rush to buy more coverage every time your income goes up.

In my case, we haven't taken on more expenses as a result of my income doubling. Sure, we might travel more now that we have that flexibility, but travel isn't a commitment the same way a mortgage or car payment is. And so for now, we plan to leave our life insurance coverage as-is.

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