Life changes faster than most people update their insurance. You may marry, switch jobs, have kids, buy a house, get a promotion — but your life insurance stays the same. That gap can leave loved ones under-protected or cause you to overpay for coverage you no longer need. To fix this, you might want to stop treating life insurance like a “set it and forget it” chore. Reevaluate every few years, and whenever big life events happen, so your coverage matches your real obligations.
Below is how to measure what you need, what policy moves make sense at different life stages, and how to avoid costly mistakes.
Why You Should Review Your Policy Every Few Years (and sooner after major events)
Two simple facts make periodic review essential:
Your liabilities and income change. A policy sized for a single person renting an apartment won’t necessarily cover a family with a mortgage and college costs. Financial planners and insurers recommend checking coverage whenever your household or financial obligations shift.
Your insurance options change with age and health. Premiums are driven by age and health at the time you buy. Locking in generous term coverage while young and healthy is often cheaper than trying to add the same protection later when rates are higher or underwriting is stricter. That’s why periodic reassessment — and occasionally purchasing additional coverage early — can be cost-effective.
Industry groups and consumer guides typically recommend reviewing at least every two to three years, and immediately after life events like marriage, childbirth, divorce, job change, or a large change in assets or debts. If you prefer a conservative cadence, an annual check is reasonable.
Life Events That Should Trigger an Immediate Review
Treat these as automatic triggers, when any of them happens, open your policy documents and take action:
Marriage or divorce. Update beneficiaries and reassess whether combined household income or separation of finances changes the amount you need.
Birth or adoption of a child. Add coverage to protect childcare, future education, and household costs; name guardians and contingent beneficiaries.
Buying a home or taking on large debt. Mortgages and loans increase your family’s debt burden, coverage should ideally clear those liabilities.
Change in employment or employer benefits. Employer-provided group life is convenient but usually limited, losing that job could cut your coverage overnight. Compare group amounts with what an individual policy would need to replace.
Significant income change. Promotions, new businesses, or job losses change income-replacement needs.
Health changes. Some health improvements can reduce rates, declines can make buying new coverage harder so act while you can.
How to Estimate How Much Coverage You Actually Need
There are several reasonable methods, use one that fits your situation and sanity level. Don’t rely on a 10x paycheck rule as the default, it’s a quick heuristic but often too rough. For a practical figure:
DIME method (Debt, Income, Mortgage, Education). Add outstanding debts and mortgage, estimate future income replacement (years to retirement × desired percent of salary) and include future education or special expenses. This method is straightforward and widely used.
Needs-based calculation with a calculator. Use a reputable online calculator to model your household’s specific numbers .
Hybrid approach. Start with needs calculations, subtract liquid assets and existing savings, then factor in employer coverage and investment portfolios.
If you do the math and the range is wide, err toward the amount that keeps your family’s basic standard of living intact for several years and clears durable debts. Financial press guidance and consumer research often suggest 10–15× income as a back-of-envelope starting point, but refine that with the DIME approach or calculators.
Options When Your Review Shows a Mismatch
If your current policy doesn’t line up with your new needs, you can:
Buy supplemental term coverage. Adding a term policy is usually the cheapest way to get additional protection for a defined period (example, until your mortgage is paid or kids are independent).
Increase existing term coverage (if allowed). Some policies include guaranteed increase or conversion options; check your contract for such riders. Converting part of the term to permanent coverage can make sense if you want lifelong protection and can afford higher premiums.
Add riders for specific needs. Accelerated death benefits, disability waivers of premium, or child riders can plug gaps without replacing the whole policy. Rider availability varies, so review your policy’s options.
Buy a new policy and keep the old one (if affordable). If your health deteriorated since the original policy, keeping a grandfathered low premium while adding new coverage may be prudent. Be cautious about replacement if the new policy costs significantly more.
Before replacing an in-force policy, compare total costs, surrender charges (for permanent policies), and whether the new policy requires underwriting that could increase premiums or deny coverage.
Employer Life Insurance is a Useful Baseline, Not a Long-term Plan
Employer group life is better than nothing, many plans offer a basic multiple of salary but it’s often insufficient for full family protection and disappears when you leave the job. Experts recommend using employer coverage as part of your total but buying individual policies for the long term because individual rates are locked in and portable. If your employer offers low-cost supplemental coverage, buy what you need, but consider owning at least some individual term insurance.
Timing Matters
If your review shows you need more coverage, don’t automatically procrastinate. Insurance costs rise with age and can become prohibitive with new medical issues. Buying additional term coverage while you’re younger and healthier usually yields significantly lower premiums than waiting. That’s the practical side of the “review early, act early” rule.
Checklist for Your Policy Review (use every 2–3 years or after triggers)
- Open the policy: note the face amount, beneficiaries, premium, term length or cash value, riders, and conversion rights. 2. Recalculate needs: use DIME or an online calculator to set a target coverage amount. 3. Compare employer coverage: include group amounts and portability limits.
4. Check beneficiaries and contingent beneficiaries. Update for marriages, divorces, or births.
5. Review riders and convertibility: see if conversion to permanent coverage is available and cost-effective.
6. Obtain current quotes: shop for new term policies to compare prices, getting multiple quotes is fast online.
7. Decide and act: buy supplemental coverage, adjust beneficiaries, or keep the policy and set the next review date.
Red Flags and Common Mistakes to Avoid
Assuming employer coverage is enough. Many families discover a gap when a job ends.
Letting policies lapse during tight budgets. If premiums are unaffordable, consider converting to a reduced paid-up or term option rather than cancelling outright.
Replacing a favorable older policy without checking total costs. Some older permanent policies have attractive guarantees; replacement can be expensive.
Forgetting to name contingent beneficiaries and minor guardians. This is one of the simplest but most consequential oversights.
We believe the information in this material is reliable, but we cannot guarantee its accuracy or completeness. The opinions, estimates, and strategies shared reflect the author’s judgment based on current market conditions and may change without notice.
The views and strategies shared in this material represent the author’s personal judgment and may differ from those of other contributors at IntriguePages. This content does not constitute official IntriguePages research and should not be interpreted as such. Before making any financial decisions, carefully consider your personal goals and circumstances. For personalized guidance, please consult a qualified financial advisor.
