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When Should You Decrease Your Life Insurance Coverage?

There are specific events during your life when you will need to reassess your situation and decrease the amount of life insurance coverage to suit your new needs.


This page:

Advises you when it is safe to decrease the amount of insurance coverage.

Suggests a reasonable adjustment for each circumstance.


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Once again, you should decrease your life insurance coverage:

• If you are single and independent
• If you've recently divorced
• When you have finally retired

When You Are On Your Own

As a young adult, you may be considering purchasing a life insurance policy. Most likely you are in good health and, therefore, will pose little risk for the insurance company. As a result, your premiums will be lower than they might be five years down the road.

The question, then, is whether you should take advantage of your good health and favorable rates by buying a policy now.

If you are single, independent, and self-sufficient, your death will most likely not affect the financial stability of anyone else. For this reason, we recommend postponing the purchase of a life insurance policy until later in life.

However, if your family has a history of a serious medical condition that jeopardizes insurability, it might be a good idea to purchase a policy while you are at such a low risk.

Also, if you are young and single, but have financial obligations - perhaps you are a co-signer on a mortgage or have a relative who depends upon your support - purchasing a life insurance policy is a wise decision..

On Your Own, Again

First of all, we are very sorry.

Divorce may make it necessary for you to purchase your own life insurance policy, decrease your death benefit, or change your designated beneficiary.

Divorce is complicated so it is difficult to counsel without the specifics of the situation. However, it is probably advisable to change your beneficiary to include your children.

Depending on your financial obligations, you should either increase of decrease your death benefit. For instance if you are no longer responsible for making mortgage payments or if you have taken on sole responsibility of the mortgage payments, your insurance policy should reflect this change.

Enjoying retirement

Retirement may decrease you need for insurance. Depending upon your other assets, you may have enough savings to live comfortably even if your spouse passes away. If this is the case, your life insurance policy may no longer be necessary.

If you want to leave something to your heirs, you should consider making them the beneficiaries instead of your spouse. You may even want to donate your death benefit proceeds to a favorite charity you have.

In any case, you should weigh the expense of maintaining your policy with the eventual pay-off and make a decision based upon that.


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If you'd like a little help with designing a policy, or advice on changing your current policy, get in touch with an agent from one of our partner carriers, who can design a policy to fit your specific needs.








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