8 Signs You Need More Life Insurance: How to Protect Your Estate and Business

The Discussion: When to Upgrade Your Financial Protection

Introduction: Many people treat life insurance as a "set it and forget it" task. However, for the successful professional or entrepreneur, life insurance must evolve alongside your lifestyle and liabilities. Registered Financial Planner David Angway identifies the eight specific triggers for increasing your coverage.

Frequently Asked Questions (FAQ)

1. How do family changes affect my insurance needs? Any increase in family responsibilities is the primary trigger for more coverage. This includes getting married or the birth of a child. Because these individuals become dependent on your income, you must ensure their future is secure. This also applies if you are supporting aging parents who may require expensive long-term care.

2. Should I increase my coverage if my salary goes up? Yes. Career and income growth often lead to lifestyle inflation. If you are the primary breadwinner, your insurance should reflect your current standard of living. If your coverage remains static while your lifestyle improves, your family will face a significant "financial gap" if your income is suddenly lost.

3. What happens to my insurance needs if I take out a large loan? If you take on a new mortgage, home loan, or accumulate significant debt, you must increase your coverage. You do not want these liabilities to become a burden on your family. This is where Mortgage Redemption Insurance (MRI) or additional life coverage becomes mandatory to ensure your debts are fully covered.

4. Does aging or health status play a role? As we age, the risk of developing health conditions increases. It is a "green flag" to lock in higher coverage while you are still relatively healthy. Waiting until a medical condition arises may make it more expensive or even impossible to get the additional coverage you need.

5. Is my employer-provided insurance enough? Relying 100% on employer benefits is a major risk. These are privileges, not rights, and can change or disappear if you leave the company or if the company changes its policy. You should consider an individual policy to maintain control and ensure you aren't left vulnerable during a career transition.

6. How do business partnerships impact my insurance requirements? For entrepreneurs, wealth protection is vital. If you have business partners, you need Key Person Insurance or Buy-Sell Agreements. These tools ensure business continuity and prevent your partners from simply "buying out" your grieving family for an unfair price. It provides the liquidity needed to settle shares properly.

7. Why should I consider inflation and the rising cost of living? The ₱1 million coverage you bought ten years ago does not have the same purchasing power today. To protect your family's future "real value," you must adjust your death benefit to keep up with inflation and the rising costs of education and healthcare.

8. Can life insurance help with estate and wealth preservation? For wealthy clients, life insurance is a strategic tool for estate tax liquidity. It provides the ready cash needed to pay estate taxes, ensuring that your hard-earned assets—like real estate and businesses—can be passed down to your heirs intact without being sold off to pay the government.

Clean Takeaways: The Wealthy Client’s Checklist

• Audit Your Liabilities: If your debt (mortgages, business loans) has grown, your insurance must grow with it.

• Protect Your Business: Use Key Person Insurance to safeguard the "human capital" that makes your business profitable.

• Don't Depend on the Boss: Supplement employer-provided plans with a personal policy you can control.

• Lifestyle Matching: Ensure your coverage can sustain your family’s current lifestyle, not just their basic needs.

• Review Annually: Meet with your Registered Financial Planner once a year to adjust your coverage based on your most recent financial statement.

For professional wealth management and insurance audits, visit davidangway.com.