Life Insurance Coverage Can Change with Job Changes

New jobs can change your life insurance needs. You may want more life insurance to provide for your family at your new higher standard of living. You may need to supplement whatever life insurance your new job offers (if any). A promotion or a job change is a good time to review your life insurance.

 

When you consider your life insurance needs, remember that life insurance does more than replace your salary for your beneficiaries. It also pays any outstanding debts when you die, takes care of the mortgage on your house, pays funeral expenses, and helps cover estate taxes on what you leave behind. Don't base your life insurance just on your new salary. Although it may change the things your life insurance needs are based on, an estate planning expert can help you decide what your actual life insurance needs are.

Most benefits packages include some form of term life insurance. But when you change jobs, you lose your old life insurance, and your new job may come with less life insurance coverage than you need. Many employers offer the ability to buy supplemental life insurance or increased coverage if the standard life insurance offering is not sufficient.

 

Some employers also let you buy into a permanent life insurance plan that you take with you when you leave the job. This can be one way of obtaining permanent life insurance if your age or health makes it difficult to purchase on your own. Check with your benefits manager to find out if your company offers this benefit.

Your promotion probably came with a raise in pay. You may have heard that ''you should have five to seven times your salary in life insurance.'' But that depends on how you spend your increased salary. Your life insurance should be enough to let your beneficiaries maintain their standard of living if you should die prematurely. But if you don't change your lifestyle when your salary increases, your life insurance needs may not actually have gone up.

 

When reviewing your life insurance, consider your long-term estate planning goals, not just how much money you are making at the moment. If your life insurance needs have not changed, don't automatically increase your life insurance to match your new salary. Consult an estate planning professional if you are uncertain how much life insurance you actually need.