2008 Insurance Guide
insurance
7 reasons to review term life coverage

There are several life events that may modify your need for term life insurance coverage.

In some cases, it makes sense to reduce or drop coverage. In other situations, you may want to increase your policy limits.

So, when should you reassess your term policy? Following are some life events that call for a reassessment of term-life coverage:

Family situation changes. When you marry, divorce or have a child, your need for life insurance may change. If you need more coverage, this may be the time to take out a second term policy.

Why? Because most term policies won't let you add to the face death-benefit amount. And the longer you wait, the more likely your risk factors will cost you more in premiums.

If you need less coverage, you may want to pull the plug on a term policy, but not before you've shopped around and have a better fit in place.

Income changes. If you get a raise at work, don't forget to modify your term insurance coverage.

"You may need to change your term policy based on your income," says financial author and radio host Dave Ramsey. "It is a good idea to insure yourself and your family for 10 times the amount of your income. If a spouse stays home with the kids, be sure to insure that spouse, too."

Retirement looms. Somewhere between their 40s and 50s, people start looking in earnest at the retirement picture. If your house is paid off, the kids are grown and you are self-insured, you may want to pull the plug on term coverage and open a long-term care or home health policy instead.

This also may be the time to drop the policy of a spouse who is not working.

You've already retired. If you've already retired, the money you're using for premiums may be spent in better ways. If so, terminate your term.

"Once you've retired, you know what your financial situation is going to be, you know what bills you're going to have and the kind of cash you'll need," says Carol Carey-Odekirk, spokeswoman for State Farm.

Health changes. A sudden health crisis can change your insurability in a matter of seconds. You may suddenly need more insurance or a different mix of insurance.

Leave your term policy in place until figuring out your next move, especially if the policy is guaranteed renewable.

Policy renewal on the horizon. Term policies are changing fast, thanks to their popularity. Before deciding to automatically renew, comparison shop to learn more about the new rates and features available today.

Don't be afraid to talk frankly with your agent about possible options. He or she may suggest an even better deal.

Approaching maximum renewable age. Since you're going to lose your term coverage soon, now is a good time to talk with your insurance agent to explore your remaining options.

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