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Why You Should Update Your Life Insurance Policy

Life insurance is a crucial part of your estate plan, ensuring your loved ones are provided for after your passing. As your circumstances change, so might your life insurance needs. Here are nine reasons to consider updating your life insurance policy.

1. You Want a Different Type of Life Insurance

There are two main types of life insurance: term and permanent. Term life insurance covers you for a specific period, usually 10 to 30 years, and pays a death benefit if you pass away during that term. Permanent life insurance, on the other hand, lasts your entire lifetime and builds cash value that you can borrow from or withdraw. However, it is significantly more expensive than term life insurance.

As your financial situation changes, you might want to switch from term to permanent life insurance or vice versa. Additionally, you may want to add riders to your policy for extra coverage, such as long-term care or critical illness benefits.

2. Your Term Life Insurance Policy Is Expiring

If your term life insurance policy is nearing its end, you will need to renew it or shop for a new policy. Some term policies are renewable on a yearly basis without a medical exam, but premiums typically increase with age. If you prefer stable premiums, consider getting quotes from various carriers for a new term life insurance policy.

3. Your Family Status Has Changed

Life events such as marriage, having children, or divorce can significantly impact your life insurance needs. You may need more coverage to protect your growing family or adjust your beneficiaries to reflect your current situation.

4. You’re Buying or Paying Off a Home

Purchasing a home is a long-term financial commitment. Ensuring your life insurance covers your mortgage can help your family stay in their home if you pass away. Conversely, once your mortgage is paid off, you might reduce your coverage.

5. Your Health Has Changed

Your health status can affect your life insurance premiums. If your health has improved since you first purchased your policy, you might qualify for lower rates. Conversely, changes in your partner’s or child’s health might necessitate increased coverage to cover potential future expenses.

6. Your Financial Situation Is Better—or Worse

As your income and lifestyle change, so do your life insurance needs. A higher income might mean more expenses, requiring more coverage. If you’re facing financial difficulties, consider shopping around for better rates or switching from permanent to term life insurance.

7. Your Employment Changes

Job changes can affect your life insurance needs. Losing employer-provided life insurance or becoming a stay-at-home parent might require additional coverage. Starting a business may also necessitate life insurance for key partners to ensure the business’s financial stability.

8. You’re Nearing Retirement

As you approach retirement, reassess your life insurance needs. If your partner can access Social Security, pension benefits, or retirement accounts, and your children are financially independent, you might not need as much coverage.

9. You’re Supporting Aging Parents

If your aging parents might become financially dependent on you, increasing your life insurance coverage can help ensure they are cared for in your absence.

The Bottom Line

Life insurance premiums are influenced by factors such as health, age, and credit-based insurance scores. Regularly reviewing and updating your policy ensures it meets your current needs and provides the best financial protection for your loved ones.

For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. Our team is here to help you find the best solutions for your financial future.

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