At the beginning of your career, you may not require a life cover unless you have financial dependents. You may opt for permanent disability or personal accident coverage that will also include the risk of accidental demise or disability. This is because when you are young, the possibility of an untimely death due to natural causes is low.
However, one benefit of acquiring life cover at an early age is that you are able to reduce the premium by a significant amount. It is important to keep in mind that insurance needs depend on your life stage and you need to modify your coverage as per your changing requirements.
Here are seven stages of life during which you must reassess your insurance needs.
- When you get married
You may be financially responsible for your spouse even if your spouse is earning. To ensure your spouse’s financial stability in case of your untimely demise, a term plan may be highly beneficial. The death benefit may be used to pay off the home or any other loan or meet regular expenses.
- When you start a family
As a responsible parent, it is crucial you ensure the financial stability of your young children in the case of an unfortunate event. A life insurance policy at this stage may be able to ensure your children receive a good education even in your absence.
- When you avail of a home loan
It is likely that you may have availed of a loan to buy your dream home. In case of your sudden demise, your family may have to vacate the home if they are unable to meet the loan repayments. It is recommended you buy a term insurance policy for a longer duration to ensure your loved ones do not face any financial difficulties to service the mortgage in your absence.
- When you undergo separation or divorce
Although nobody plans for parting ways with their spouse in future, separation and divorce are not uncommon in today’s world. It is important that you make timely decisions to change the beneficiaries in your policy in favor of your children. If you are the policyholder, the procedure is simple and quick. However, if your spouse owns the policy, you may need to buy a new insurance plan naming your children as the beneficiaries.