Life insurance used to have a much larger role  in an estate plan than it does today. Why is this? Because families would use life insurance payouts to pay estate taxes. But with the federal gift and estate tax exemption now at $12.92 million for 2023, less and less families are affected by estate tax.

However, life insurance remains a powerful tool for providing for your loved ones in the event of your untimely death. The amount of life insurance that’s right for you depends on your personal circumstances. Therefore, it’s critical to review your life insurance needs regularly given changing circumstances.

Reasons To Reevaluate
Consider reevaluating your insurance coverage if you’re:

• Getting married
• Getting divorced
• Having children
• Approaching retirement
• Facing health issues

The right amount of insurance depends on your family’s current and expected future income and expenses, as well as the amount of income your family would lose should you pass away.

The events listed above can change the equation, so it’s a good idea to revisit your life insurance needs as you reach these milestones. For example, if you get married and have kids, your current and future obligations are likely to increase significantly for expenses related to childcare, mortgage, car payments, and college tuition.

As you get older, your expenses may go up or down, depending on your circumstances. For example, as your children become financially independent, they’ll no longer rely on you for financial support.

On the other hand, health care expenses for you and your spouse may increase. When you retire, you’ll no longer have a salary, but you may have new sources of income, such as retirement plans and Social Security. You may or may not have paid off your mortgage, student loans, or other debts. Also, you may or may not have accumulated sufficient wealth to provide for your family.

Periodic Reassessment A Must
There are many factors that affect your need for life insurance, and these factors change over time. To make sure you’re not over- or underinsured, reassess your insurance needs periodically and especially when your life circumstances change. We can help you determine whether you have an adequate amount of life insurance coverage.