One of the most common questions families ask when using their cash value life insurance policy is: “How do I know when it’s time to start another policy?” Every situation is unique, and there’s no one-size-fits-all answer, but here are four considerations to keep in mind as the years roll on:
Consideration #1: Increased Income
Your money has to reside somewhere, and when your income grows, you need a plan for where it goes. Too often, expenses rise to match income—that’s Parkinson’s Law at work. Beat it by being proactive. If you see a raise or bonus on the horizon, be ready to channel that extra cash into another policy.
Call to Action: Spend 30 minutes this week mapping out your next income bump and how you’ll use it.
Consideration #2: Uninsured Spouse (and Children)
A big gap I see? Only the breadwinner is insured. Big mistake! The stay-at-home spouse’s role is invaluable, yet we often overlook their need for coverage. Ask yourself: “If tragedy struck my spouse, and I had to hire full-time help, how would that hit our finances?” Don’t wait to find out. Ensure both spouses have policies large enough to keep your family functioning financially, no matter what.
Consideration #3: Windfalls
Most of us will face a financial windfall someday—an inheritance, a business sale, or even your kid’s YouTube channel going viral. That money needs a home. With planning, you can have a new policy ready to absorb those funds, turning a one-time gain into long-term wealth.
Consideration #4: Earmarked Funds
Think creatively: money set aside for charity, taxes, college, or real estate isn’t doing much in a commercial bank. Why not move it into another cash value policy? You’ll create an asset while you wait to use it. Your money works harder, and so do you.
For a deeper dive, tune into Episode 182 of the Wealth Warehouse Podcast: When to Start the Next Policy
Cheers,
Dave
