Why you might need to revisit your life insurance

16 July 2020

3 min read

Holly Thomas Personal Finance Journalist
Holly Thomas

Personal Finance Journalist

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There are several life-changing events that might trigger the need to review your life insurance.

If you are already the owner of a comprehensive life insurance policy you may not think it needs revisiting. But it’s important to remember that the terms were based on your financial situation and commitments at the time you signed on the dotted line.

Here are the top six life changing events that might trigger the need to review your current life cover.

 

Getting married

It can be worth boosting your life insurance when you get married or enter a civil partnership, particularly when your income is needed to support the household.

 

Having a baby

Once more dependents come into your family, you’ll need to consider increasing the amount of cover to ensure they are cared for if you’re no longer around to take care of them financially.

 

Growing your family

After two or more children, many parents decide it’s more cost effective for one parent to stay at home, until school age at least. A stay-at-home parent looking after the home and children should consider life cover if they don’t already have it. Should that person die, childcare would need to be paid for, or the working parent would need to cut their hours.

More dependents might require a further boost to existing cover.

 

Moving to a more valuable home

Most mortgage providers require you to take out life insurance to cover your mortgage payments, so that they know the debt will be paid if you die. Should you upgrade your home, don’t forget to revisit the amount to ensure it’s enough to reflect the more valuable asset. Remember, you don’t have to buy your life insurance from your mortgage lender. Check across the market to find the best value policy.

 

Changing jobs

If your previous employer offered death in service benefits, a named person or people will be paid a sum of money - usually a multiple of your salary - if you die while you’re working for the company. But if your new company doesn’t offer this, it might be worth thinking about taking out extra life cover to replace it. 

 

Divorce

When two become one, you should check that your level of cover is correct, taking into account the costs and financial changes of the divorce. You might also want to change the beneficiary of your life insurance policy if this is currently your ex-partner.

Biography

Holly Thomas is an award-winning freelance financial journalist and former Deputy Money Editor at The Sunday Times. Her work can be seen in national press including the Daily Mail, The Times, and the Daily Telegraph.