For many people, change is the only constant in life. Life changes—sometimes at blinding speeds. When life does change, it can be helpful to reevaluate your life insurance coverage. As you build your career and grow your family, you may find your need for life insurance protection rises. As your career winds down and your children become more financially independent, you may have less need for coverage.
What stage of life are you in? And how have the recent changes in your life affected your need for life insurance protection? If you’re not sure how to answer these questions, now may be a good time to review your coverage with your life insurance professional. Also, take a look at each stage of life below and consider how your needs may change over time.
The Single Life
If you have just entered the working world and don’t yet have a spouse or children, life insurance may be the furthest thing from your mind. In fact, you may have little or no need for it at this point.
Before purchasing life insurance, think about what financial burdens may exist for others if you passed away. Do you have any cosigners on outstanding loans? Would your parents be burdened if they had to pay for your funeral? Does anyone rely on you for financial support?
One reason to potentially consider coverage is you are likely young and relatively healthy at this point. That could help you obtain life insurance at a reasonable cost. However, you also may be better served by investing your money rather than spending it on life insurance premiums.
Your need for life insurance will likely increase after you marry. You and your spouse may purchase a home together, combine your bank accounts, and implement a plan to save for retirement. If either of you unexpectedly passed away, it could create a serious financial challenge for the surviving spouse.
Consider what each of your financial needs would be if the other person passed away. Could your spouse support himself or herself without your income? Would your spouse need help covering the mortgage or other debts? If so, life insurance may be a wise strategy.
Baby Makes Three
You will almost certainly see your life insurance needs rise after the birth of your first child. He or she will likely be dependent upon you for care and financial support. If you passed away, your child and your partner may face a very difficult financial situation.
At this stage, you may want to consider a term policy. Term life insurance offers coverage for a set period of time, such as 10, 20 or even 30 years. It’s also usually affordable, especially if you are young and healthy. Term insurance may allow you to maximize your coverage while your child is in your home and financially dependent upon you.
You will likely also see your income rise as you get older. You may move up the company ladder and increase your income. Or you could venture out and start your own business. Either way, increasing income is common for many adults as they progress through their careers.
As your income grows, you may find your lifestyle is also elevated. You could move into a bigger home or start driving nicer cars. You may send your children to private school or purchase vacation property. This expansion of lifestyle may necessitate additional coverage.
You’ll also want to protect your spouse’s ability to retire should you pass away. For example, if you unexpectedly passed, would your spouse be able to continue to save for retirement? Now may be the time to explore permanent life insurance policies that can protect you and your spouse for the rest of your lives.
Finally, like many workers, you will likely transition into retirement at some point. Your need for life insurance may decline at this time. You may not have any debt, and hopefully you will have a significant amount of assets to support yourself and your spouse.
However, it still could make sense to maintain some level of coverage so the surviving spouse has financial support. For example, it’s possible you’ll need costly long-term care before you pass away. That care could drain your assets. Life insurance could provide your spouse with much needed liquidity after you pass.
You may find it helpful to review your life insurance needs with a financial professional. Contact us at J. Harris Financial. We can review your needs and goals with you and then recommend a strategy to protect you and your family. We welcome the opportunity to serve you. Contact us today to start the conversation.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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