5 Signs You Might Be Underinsured

If you have loved ones or dependents you want to provide for in case anything unexpected happened, life insurance is essential. This coverage helps prevent your family’s financial stability from being jeopardized in case you can no longer provide for them. As such, you have to keep in mind how much life insurance is enough, since the answer can vary greatly depending on your stage in life.

In this article:

• You Only Have Coverage Through Your Employer
• You Have a Stay-at-Home Spouse Without Coverage
• Your Income Increased
• You Purchased a Home
• You Just Had a Child
• Frequently Asked Questions (FAQs) About Life Insurance and being Underinsured

You Only Have Coverage Through Your Employer

Relying solely on life insurance provided by your employer might leave you underinsured. While having some coverage is better than none, employer-sponsored plans typically offer limited protection, often just one or two years’ worth of your salary. This may not be enough if you have substantial debts or want to contribute to your children’s college education. This coverage is also tied to your job, meaning it vanishes if you leave your job for any reason.

Purchasing an individual policy, on the other hand, gives you access to a broader range of life insurance options, including permanent policies that offer living benefits you can use during your lifetime.

Individual life insurance policies allow you to tailor the coverage to your specific needs. You can choose the amount of coverage and the length of the term. Also, unlike employer-provided policies, individual life insurance is portable. This means you own the policy, and it stays with you regardless of changes in your employment status.

You Have a Stay-at-Home Spouse Without Coverage

When it comes to life insurance, many people overlook the importance of insuring a stay-at-home spouse. But let’s be honest: their contributions to the household are priceless, and losing them would create more than just an emotional void, it would bring serious financial challenges too.

Imagine suddenly needing to cover the costs of childcare, housekeeping, or even just managing the day-to-day tasks they handled so effortlessly. A life insurance policy for your stay-at-home spouse ensures that you have the financial support to hire the necessary help and maintain your family’s quality of life. 

Plus, this coverage offers a safety net for long-term goals. Whether it’s ensuring your kids’ college plans stay on track or keeping your retirement dreams alive. In a nutshell, it’s about securing the future you’ve both worked hard to build, even if the unthinkable happens.

So, if you haven’t already, consider the bigger picture and the peace of mind that comes with knowing your family’s financial security is covered from all angles. After all, protecting what matters most isn’t just a priority, it’s a necessity.

 Your Income Increased

A raise is always welcome news, but if your earnings have seen a significant bump since you first purchased your life insurance policy, it might be time to reassess your coverage. As your income grows, so do your financial responsibilities and lifestyle. The last thing your loved ones should have to face in the event of your passing or disability is a sudden need to downsize or cut back on the life you’ve worked hard to build.

With a higher income often comes bigger commitments. Whether it’s a larger mortgage, higher education costs for your children, or simply an elevated standard of living. If your life insurance coverage hasn’t kept pace with these changes, your family could find themselves under significant financial strain at a time when they need stability the most. Re-evaluating your policy to reflect your current income ensures that your loved ones can maintain the lifestyle you’ve created together, even if the unexpected happens.

You Purchased a Home

Taking on a new mortgage is a significant financial responsibility, and it’s one that becomes even more important if something were to happen to you. If you’ve purchased a new home since you first got your life insurance policy, it’s worth considering whether you need to increase your coverage. The last thing your family should have to worry about after a loss is how to keep up with mortgage payments or the possibility of losing their home.

A new home often means a larger mortgage and additional expenses, which can be overwhelming for a surviving spouse to manage alone. 

It might feel daunting to figure out how much life insurance you need as your financial situation evolves, but it’s a manageable task. Tools like a Life Insurance Needs Calculator can help you estimate the right amount of coverage, making sure your family’s financial future is secure. A small investment of time today can provide years of stability and security for those you care about most.

You Just Had a Child

Every parent knows that raising a child is a significant financial commitment—more than $21,000 per year on average in 2023, and that’s not even counting the cost of college! So, if you’re a new parent or have recently welcomed another child into your family, it’s the perfect time to revisit your life insurance coverage.

As your family grows, so do the financial responsibilities that come with it, like providing food, shelter, education, and childcare. Ensuring that your life insurance policy is sufficient to meet these long-term needs is crucial for your dependents’ well-being. The cost of childcare alone can be a game-changer when determining how much coverage is necessary. Even one additional child can significantly increase your life insurance needs, making it essential to review and adjust your policy accordingly.

Taking the time now to update your coverage ensures that, should the unexpected happen, your family has the financial resources to maintain their quality of life and achieve their future goals.

Frequently Asked Questions (FAQs) About Life Insurance and being Underinsured

Find a solution for what you’re looking for 

Don’t let being underinsured put your family’s future at risk. Regularly review and update your life insurance to ensure they’re fully protected. At Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to ensure the best solution for you and your needs. We provide expert life insurance solutions, including no medical life insurance, critical illness insurance, term life insurance, and permanent life insurance to build the best package to give you the protection you need. 

Contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today! We’re proudly based out of Hamilton, and service clients anywhere in Ontario, British Columbia, Alberta, and Manitoba including areas such as Kitchener, Airdrie, Kamloops and Brandon.