When should you rethink your insurance coverage?
When you’re in your early 20s, chances are you haven’t even thought about insurance coverage. Maybe if you drive, you’ve thought a little bit about your car insurance, but there are lots of types of insurance policies designed for asset protection at different stages of life. While you may not need them now, at some point you should rethink your insurance coverage.
Here are some of life’s most important milestones (in no particular order) and how they change your insurance coverage needs:
First rental
Moving into your own place for the first time is one of the most freeing moments in a person’s life. Soon, though, the reality of running your own home sinks in and you realize that freedom from your parents doesn’t mean freedom from responsibility. Part of being responsible means making sure your possessions are safe. That’s where renters insurance comes in. Renters or tenants insurance covers all of the stuff you own. It also provides liability coverage against accidents that injure or damage other people’s stuff.
If you have a car, understand that getting your own address means you need to update your auto insurance policy. It might even mean getting your own policy separate from your parents.
Marriage/cohabitation
Congratulations! True love comes with a bunch of awesome perks. But it also means you’re sharing financial responsibility with another person. That might mean you need to update your car insurance policy to include two drivers and both your vehicles if necessary. You may also want to think about life insurance – especially if you take on any debts together. You want your partner to be able to pay off your joint obligations if you pass early.
And that isn’t all marriage might change. You might decide to expand your family.
Kids
“First comes love, then comes marriage, then comes baby in a baby carriage.”
Of course, while marriage is usually a part of the equation, there are lots of families that buck that trend. Regardless of how your love life looks, you may become a parent to a child. If you do, your life will change in huge ways – including your insurance needs. Life insurance is an essential policy to have once you have children. After all, they’ll be dependent on you for almost two decades. If anything happens to you, they’ll need all the help they can get. If you already have a life insurance policy, it may be time to increase it, especially if you have multiple young children. Once they get older and more independent, you can reduce the coverage.
First home
In Canada, due in no small part to astronomical home prices, more and more people are only buying homes as couples. You definitely want life insurance if you co-sign a major loan with someone who would suffer if they had to repay it without you.
Owning your first home also means you should have a home insurance policy. As time goes on and your home and life situation changes, reassess your coverage and adjust accordingly, just like you should be doing for the rest of your finances on a regular basis.
It isn’t just these milestones that should prompt you to adjust your insurance coverage. Don’t be complacent when it comes to your financial protection. Rethink your insurance coverage when it’s time to renew policies or when something major changes the way you live your life.