My Income Has Increased Since I Got Life Insurance. Here's Why I'm Not Buying More Coverage

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  • When I applied for life insurance, my income was a lot lower than it is today.
  • Though I've thought about getting more life insurance, for now, I'm opting not to.

There's a reason behind my decision.

My husband and I admittedly didn't think about getting life insurance until kids came into the picture. But at that point, we knew we needed to secure coverage to ensure they'd be protected financially. 

At the time we applied for our life insurance policies, my husband's income was a lot higher than mine. And so we took out twice as much life insurance on him than we did on me. 

At this point, though, my income has caught up to my husband's, so we've thought about increasing my life insurance coverage. But for now, we've opted not to purchase more coverage for one big reason.

When the coverage you have is enough

My husband and I made the decision long ago to try to cover our essential bills on one income -- his. This isn't to say that my income isn't needed at all. The earnings I bring in help pay for things like summer camps, leisure, extracurricular activities, vacations, college savings, regular savings, and retirement savings. 

But when it comes to paying for essentials like our mortgage, vehicles, food, and utilities, that all comes out of my husband's earnings. In fact, we've made sure through the years not to take on essential expenses that his income alone couldn't cover. And when we bought our life insurance, we operated under that same assumption -- that we'd want enough coverage to replace about 10 years of my husband's income plus 10 years of mine. 

Now, my life insurance policy won't replace 10 years of my income. But that's okay, because we have higher coverage for my husband. And also, since we didn't upgrade our lifestyle by taking on larger expenses as my income grew, we feel we still have adequate coverage in place for our children.

It's a good idea to keep running the numbers

Right now, I'm opting not to buy more life insurance because I assessed our situation and determined it isn't necessary. But if your income changes through the years, and your expenses increase as a result, then it may be time to re-run your own numbers and make sure you have an adequate amount of coverage in place.

Of course, some people don't upgrade their lifestyles as their income increases. Instead, they use their extra earnings to build more of a financial cushion. And people in that boat may not need to adjust their life insurance. But if your earnings have increased and you've since upsized your home and doubled your mortgage payment and property tax bill, then more life insurance could make sense.

Meanwhile, I may change my mind on my life insurance coverage at some point -- especially if we decide to take on larger expenses down the line, like a home that costs more money to own and maintain. But for now, we're still in the same home and largely leading the same sort of lifestyle we did back when my income was considerably lower. And so for now, we're leaving my life insurance coverage as is.

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