Life changes? Consider reviewing your life insurance policy

Let's take a closer look at four important life events that could significantly impact your financial responsibilities and future plans, and why these events may call for a life insurance policy review.

1. Marriage

In the weeks after you say, "I do," try to carve out some time to think about your life insurance coverage. It's a good idea for you both to consider having coverage to help financially protect one another in the event either of you pass away. This is especially the case if your partner relies on your income. Remember, it's not only important to consider having coverage, but to make sure you are considering the right type of coverage.

2. Having children

Are you expecting your first child or is your family growing? The birth of a new child is a good time to consider looking into increasing your life insurance coverage. If you pass away, the death benefit payout can be used however the beneficiary chooses. For example, it could potentially help maintain the lifestyle of your children or be used to pay for their higher education.

It's important to keep in mind that if you name your children as beneficiaries and they are under the age of majority (18 in most provinces and territories in Canada), the life insurance death benefit payout cannot legally go directly to them if you pass away. The funds can be held and managed by a guardian or in a trust until they are of legal age. In this situation, to ensure your wishes are carried out properly, it's a good idea to speak with a financial advisor or attorney.

3. Divorce

You may want to update the primary beneficiary on your life insurance policy if the person designated was your spouse (now ex-spouse). This could also be an opportunity to re-establish if you still require coverage, and if so, how much.

4. Retirement

As you approach retirement, it's a good time to reassess your financial goals and plans. If your children are grown and you have fewer dependents, you may want to speak to a licensed life insurance advisor about potentially decreasing your life insurance coverage. On the other hand, approaching retirement could be an opportunity to consider increasing your life insurance coverage to help cover end-of-life expenses, further financially support your spouse, assist with estate planning, or leave a legacy. However, it's important to remember that depending on the insurance coverage you have, updating or changing your insurance coverage can impact your premiums.

Be sure to speak with a licensed life insurance advisor if you're thinking about potentially updating or changing your coverage due to any of these life events.

Example 1: An increase or decrease in income

Have you experienced an increase or decrease in your income? If so, you may want to revisit your life insurance policy to make sure it still meets your needs. It's important to keep your policy aligned with your current financial situation, as changes in your income can lead to changes in your coverage needs. If your financial situation changes, you may want to speak to a licensed life insurance advisor about increasing, reducing, or retaining your current coverage level.

Example 2: Debts or a new asset

If you're carrying debt or investing in a substantial asset (like a home), you might be on a tighter budget. In this case, revisiting and potentially increasing your life insurance coverage may not be high on your priority list. However, it could be worth considering updating your coverage. 

Improvements to your health could also qualify you for lower premiums in the future. If your health has improved, it's worth revisiting your life insurance policy and speaking with a life insurance licensed advisor to see if you're eligible for lower premiums or additional coverage options. Also, if you were previously denied life insurance coverage due to your health and your health has since improved, you can reapply for coverage.

If your health changes due to a new medical condition, it can also be a good idea to revisit your life insurance policy. If you have term life coverage, you may want to consider converting your policy to a permanent life insurance policy or using your guaranteed insurability option, if available. 

It's also a good idea to review your life insurance policy leading up to its renewal or conversion date. Before this anniversary, it's recommended to look into the options offered by your insurance company. Be sure to do your research and speak with a licensed life insurance advisor about your options.

If you have a term life policy, many carriers offer policies that will automatically renew when the initial term ends. The premium will increase as well to reflect your age at the time. Many policies also come with a conversion option, which could allow you to convert your term life insurance policy into a permanent life insurance policy. For example, you could convert your TD 10-Year or 20-Year Term Life Insurance to TD Term to 100 Life Insurance.

Note: Conversion periods may be tied to a specific age or when your initial term ends.