Should you consider getting more life insurance if you get a large raise?
Congratulations, you got a big raise! Whether it was an unexpected surprise or you’ve been working towards it for months, you may well be celebrating in style. Afterward, it worth considering how a big raise may impact your life insurance. It’s not often something people think about when their income increases, but it will play a role in your family’s finances and quality of life. If anything were to happen to you, you should ensure that you have plenty of life insurance in place for your loved ones.
Do I need more life insurance after a raise?
Getting a raise in salary means that your family will likely enjoy an upgrade on their current standard of living. Once their standards are higher, they will need more coverage to help them maintain the same lifestyle in case something happens to you.
How much should I increase my insurance coverage?
The increase amount will vary from person to person, and it will largely depend on:
- Your total income – How much of a raise did you get?
- Where you live – The cost of living varies by location
- How much your family needs to live on – Calculate the expenses it takes for your family to maintain the same quality of life without your income
How do I increase my coverage?
You can choose to increase your current coverage or take out a new policy. Bear in mind that not all policies can be increased, so be sure to check with your insurance carrier before making any decisions. Generally, increasing your current policy is the best option since your health conditions may have deteriorated since you purchased it. If you can’t increase your coverage, you can either cancel the current policy and buy a completely new policy or continue with your current policy and buy supplemental coverage.
With this in mind, it’s important to work with a trusted life insurance agent who can adequately calculate your needs and find suitable coverage.