If I Purchase Term Life Insurance Now, Can I Increase my Coverage Later?

A lot can change as you travel on in your life's journey. You may choose to marry, have children, buy a home, and all the trappings. Maybe you'll be the primary caregiver of aged parents, purchase a business, or take on any number of responsibilities that may foster others dependence on you .

When you encounter a situation where you are the chief wage earner and responsible party, you know your death would leave those dependents in a devastating situation. Sound financial planning, no matter where you are in your life, means providing for the care of your loved ones, even after you're gone. But how do you know what the financial needs of your future family may be? And how do you plan for the event of your death and care of those you leave behind, if you aren't sure who that will be?

Keeping Up with Life's Changes

Once you obtain initial term or whole life coverage, most insurers will allow you to add to that coverage by purchasing an additional policy or a rider on your current policy which provides coverage for the same term, but increases that coverage to fully provide for your family's needs. Many insurers will allow you to make changes to your policy every two years, but will also require another medical exam and prescreening. If you are a young person who doesn't yet know how your life will unfold, you may not secure a large enough death benefit to provide for your loved ones' future needs. This can be remedied by waiting until the two year interval, or speaking to your insurer about other methods for raising your payout amount.

For example, say a young man decided, upon his initial employment, to take out a term life insurance policy for the term of 30 years. Say that same individual insures himself for $100,000.00, assuming that should anything happen that will allow his family to provide for funeral expenses and have a bit left over for any outstanding student loans. A few years down the road, this young man gets married. He'll change beneficiaries and probably increase his coverage to the 5-10 times his salary suggested guideline. He can do this by obtaining an additional policy, typically for the same term and under the same billing.

Should you decide to increase the term on your policy, you will most likely be allowed to do so. If your insurer allows coverage changes at the two year mark, then you can make the necessary changes to your term. You will, again, be required to provide justification of insurability through a medical exam and background check.

Determining Your Coverage

In figuring our the amount of initial coverage you need at this point in your life, you'll need to play out a series of "what if" scenarios. You'll need to anticipate any final expenses as in funeral costs or medical bills, along with your outstanding loans, mortgages and any debts you may have. You'll need to think about your family's living expenses as they get back on their feet, any taxes that will be due, such as estate tax, as well as future costs such as your children's college tuition.

It can all be pretty overwhelming, but your insurer will be able to assist you in calculating the amount of payout you should carry. A lot will depend on your career status, age and other risk factors. Wherever your starting point, know that you can increase term coverage as your needs grow and change.

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