Northwestern Mutual: 4 Reasons to Update Life Insurance Coverage as Children Age

Many new parents get life insurance quotes for the first time to help replace income and cover expenses if the unexpected happens, but they may assume it’s a one-and-done deal. No matter how long someone has been a parent or guardian, it’s important to regularly review and update coverage like term life insurance to ensure it continues to meet their family’s evolving needs. Below are four reasons parents and guardians should consider updating their life insurance coverage as their children age.

1. Changing financial responsibilities

Updating a life insurance policy becomes necessary as parents navigate the different stages of raising their children. For example, as teenagers become young adults, they will start preparing for college—the financial focus might move toward covering tuition fees, room and board, and other higher education costs. On the other hand, parents may not need as much coverage if their kids choose to attend a state school or pick up a trade that’s less expensive to learn.

Healthcare costs can also change financial responsibilities over time if a child develops new medical needs. They may require specialized treatments, ongoing therapy, or even long-term care. An updated policy can ensure that funds will be available to support the child’s health and well-being if a parent passes away.

2.Adjusting for inflation and cost of living

As time goes on, the cost of living can increase, including the cost of tuition. What may have seemed like enough coverage years ago might not cut it as expenses rise.

“Parents and guardians can look at their policies every so often to assess whether the coverage level still matches their family’s financial needs with the impact of inflation and the increasing cost of living” said Brogen Gabel, Partner and Director of Financial Planning, Northwestern Mutual – Freund & Smith Advisors. “This ensures the policy provides the right amount of financial protection to maintain their children’s lifestyle needs at every stage.”

3.Changes in family dynamics

Family dynamics can shift over time and affect how much life insurance coverage a policyholder needs. For example, divorce may lead to a parent being solely responsible for certain expenses or needing to provide additional support for their children. Changes in a spouse’s or partner’s financial situation, like getting or losing a job, can prompt a life insurance update due to shifts in household income and its impact on providing for their children.

4.Leaving a Legacy

One of the main reasons parents and guardians get life insurance is their desire to leave behind a legacy for their children, no matter their age.

“Relationships with friends and family change over the years, and so should the named beneficiaries” remarked Gabel. “Ensuring that the named beneficiaries on a life insurance policy are accurate is crucial. A parent may have switched to a permanent policy at this point, but they might want to update their coverage and beneficiaries to include their kids, spouses, grandkids, or other family members.”

Regularly reviewing and updating life insurance coverage is essential to ensure it aligns with the evolving needs of the family despite economic challenges or changes in family dynamics. By doing this, parents and guardians can provide ongoing financial security and peace of mind to ensure their loved ones are well-supported through all of life’s stages.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance
Company (NM) and its subsidiaries in Milwaukee, WI.

Source: Northwestern Mutual

Contact: Don Klein, 1-800-323-7033