When Should You Update Your Life Insurance? A Yearly Checklist

Life insurance is not "set it and forget it." The amount that was perfect when you bought it can become too little, or the wrong setup, as your life changes. The lesson here is simple: review your coverage once a year and after every big life event.

Why it matters

Your policy pays a fixed amount to the people you named. But your needs and your people change over time. If you bought a small policy when you were single and now have a spouse, two kids, and a mortgage, that old policy may leave a big gap. And an outdated beneficiary can send money to the wrong person entirely.

Life events that should trigger a review

• Marriage or a new partner. New person depending on you, new beneficiary to consider.
• A new baby or adopting. Often the single biggest jump in how much coverage you need.
• Buying a home. A mortgage is a large, long debt your coverage should account for.
• A raise or new income level. More income to replace means more coverage may be appropriate.
• Starting or growing a business. Loans, partners, and payroll can all create new needs.
• Divorce. Update beneficiaries and re-evaluate obligations.
• A death in the family, or a beneficiary passing away.
• Sending money to family (here or overseas) who now depend on you.
• A child becoming independent, you may need less coverage, or can redirect it.

The simple yearly check

Once a year (pick a date you'll remember, a birthday works), ask:

1. Is the coverage amount still right? Re-run a quick needs estimate.
2. Are my beneficiaries current? (See beneficiaries 101.)
3. Is the policy still active and affordable?
4. Did anything big change this year that the policy should reflect?

A simple example

A couple bought $250,000 of term coverage before kids. Three years and two children later, their real need is closer to $1,000,000. A yearly review catches the gap, so they can add coverage while they are still young and healthy (which keeps it affordable).

The takeaway

Your life insurance should grow with your life. A five-minute yearly review keeps your family protected by the right amount, with the money going to the right people.

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