There are many types of insurance that are obvious you shouldn't go without. Some of these include homeowners insurance, auto insurance, and health insurance. There is one other type of insurance, which although it might not seem necessary, it is important to have. That type of insurance is called life insurance.

What Is Life Insurance and Why Is It Important?

Life insurance can protect your family from financial devastation following the loss of a loved one. Because life insurance pays out after the death of the insured, it's often referred to as a death benefit.

There are many reasons it's important to have life insurance. Some of these reasons include:

  • It offers financial security and protection for surviving family members
  • It offers a way to leave an inheritance
  • It can help to pay off debts and other expenses
  • It can help family members have a peace of mind in the midst of a difficult situation

While 70% of Americans feel they should have life insurance, only about 59% of Americans have it.

Why You Should Update Your Life Insurance Policy

If you do realize the importance of having life insurance, and you have it, you should also realize the importance of updating your policy.

According to financial services experts, getting a life insurance policy is usually just the first step to ensuring your family will be financially secure if something should happen to the policyholder. Like all of your insurance policies, you should review your life insurance policy at least once a year. You should also update it after major life change has taken place.

Reviewing and updating your life insurance policy will ensure you have adequate coverage for your current needs. For example, if you took out a life insurance policy as a newlywed, with only you and your spouse living in an apartment, you will want to update it if you now live in a house and have children. Because your expenses increase, you'll need to make sure your policy can adequately cover these expenses.

It's also important that you update the beneficiaries on the life insurance policy. The beneficiaries are the ones who will receive the death benefit. If you had a niece or nephew listed as a beneficiary, but you now have children of your own, you may want to list them as beneficiaries instead.

As you can see, having a life insurance policy is extremely important, but equally important is ensuring it gets updated on a regular basis.