Should I invest in additional life coverage?
As you reach certain milestones as an adult — such as starting a family or getting married — it’s important to consider life insurance. It’s never too early to think of the future, and most importantly how your dependents or loved ones will be looked after once you’re gone. By putting a plan in place for life coverage, you can have peace of mind that your beneficiaries will be financially supported in the event of your death.
But as you begin to look into life insurance, the question of ‘how many’ may pop up. Let’s look further into the possibilities of holding multiple life insurances, and answer the main question of whether you need any additional life coverage.
Multiple life insurance policies
It’s not about whether or not you can have several different life insurance policies, as there is no legal limit to how many you can have — the question you should ask yourself is whether you need to have multiple policies.
If you find yourself in changing financial situations over time, then you may need additional coverage to suit your circumstances, rather than amending your current life insurance policy. These could include:
● Having another child or your child starts college
● Starting a business
● Moving home or changes in your mortgage
● Getting married, or changes to your spouse’s income
● Needing long-term care as you get older
● Changes to your retirement plan
● Improvements to your health condition
A good starting point is to assess your income, debt and outgoings at the present time, and compare this to the coverage you have and the money your beneficiaries will receive. By figuring out how much your family will need when you’re no longer around, you can work out if your current policy will cover these expenses, and if you need to take out an additional policy to make up for any shortcomings.
Majority of people have life insurance through their employer, which you should also evaluate to see if the coverage is as much as you require. If you want to have extra or separate coverage to an employer-sponsored life insurance policy, to ensure your expenses will be covered in the future or to maintain coverage if you change jobs, then additional life coverage may be right for you.
Supplemental life insurance
If you’re looking for extra coverage on top of a basic policy, wish to insure another member of your family, or want to guarantee a death benefit in certain events, such as a fatal accident, then you should consider supplemental life insurance.
This type of insurance acts as another layer of coverage, if your present policy does not offer enough coverage. It can be beneficial if you wish to cover more expenses in the event of your death, such as funeral costs, as these policies typically offer a wider range of death benefit.
The policy could apply to you, or could be supplemental insurance for your spouse or child. This can also be beneficial if you want your insurance to be portable, and that your coverage will apply even if you move jobs.
Although some providers may come with a larger death benefit, the premium is likely to be higher than your basic insurance, so you should always review the conditions of your existing policy before considering supplemental coverage.
When it comes to additional life coverage, it will always be reliant on your personal circumstances. Evaluate whether or not you need extra coverage, and whether this is on top of an existing policy or additional to your employee life insurance.
It’s worth noting, you may also find that there are more steps in the process when applying for another life insurance policy. Not only will you have to disclose any other policies you already have, you may also need to provide further proof of income and medical records.
Always conduct extensive research beforehand, using online resources. And perhaps consider talking to a financial adviser or insurance broker to get their invaluable expertise on the matter.