Life Events and Stages
Your insurance needs and goals can change significantly as you go through life.
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As we live life, our circumstances change because of the things we do and things that happen to us. Almost any life event can have an impact on your insurance needs. That's why it's a good idea to review your life insurance needs at least every couple of years, and especially when big changes, or life events, occur.
Many of the major life events that can trigger the need for a re-evaluation of you life insurance coverage are outlines below. Using the Life insurance Calculator and comparing your needs before and after the event can really demonstrate the value of a review. If you get a general sense that your needs may have changed, it is a good idea to have a qualified insurance professional perform a thorough analysis of your needs and offer recommendations tailored to your specific financial objectives.
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Getting Married
As a married couple you have plans to share your lives together, but you also share each other’s financial obligations. There is also hardly any life event that sets the stage more for dynamic, ongoing changes in your finances and insurance needs. Buying a Home Often this is your first major financial decision. If the unexpected happened to you, would your spouse be able to handle the mortgage along with all of their other expenses? Would you want them to have to try? Taking on Debt The typical American carries debt as a normal course of their financial life. As time passes, debt obligations can become more numerous. As long as you have a plan for managing your debt, it is not necessarily a bad thing. However, you should always consider how the debt would impact your survivors if you were no longer around. The easiest way to relieve everyone of that concern is to include paying off debt in your life insurance planning. Having a Child Your children are your greatest responsibility, and life insurance can guarantee that if you are not there for them, they have the chance to grow up enjoying the stability and opportunities you would have provided. The financial resources needed to raise children to maturity, pay for higher education, and help them get a head start as independent adults can be considerable, but life insurance can create those resources for pennies on the dollar. Planning for College As college costs continue to increase, it is important to start savings and investment plans sooner than later. Having an accumulation plan is just one part of a complete college funding plan though. You also need a strategy to make sure that you plan will be completed if you are not there or become unable to work. Various strategies that may be explored include:
Remember, a college funding plan without insurance protecting it is just a savings and investment agenda that can end with your death or disability. Planning for Retirement For most people, “retirement planning” means 401(k)s, IRAs, mutual funds and annuities. Use these instruments wisely, get to age 65, and begin enjoying your retirement. But what if things don’t work out that way? What if the unexpected happens – you die or become disabled? What happens to your plan? What happens to your spouse’s plan if it also depended on your retirement savings to help support them through their retirement years? Insurance can help complete your retirement plans and preserve your assets in many ways. Here are a few examples: Complete your retirement plans if you die prematurely. If you died before reaching your planned retirement, your survivors would miss both your salary for current living expenses and the funds you were contributing toward your future. Life insurance not only provides the funds needed for your family to maintain their current lifestyle, but it can provide the final funding that was expected to complete your spouse’s retirement needs. Supplemental retirement income. Some permanent life insurance policies can be structured to not only provide the benefit required to complete your plan in the event of premature death, but to also emphasize tax deferred accumulation of funds that can generate ongoing tax-free income to supplement your other income sources while you are living. Preserve and transfer assets to your heirs. For sufficiently large estates, life insurance can be vital for paying estate taxes and preventing potentially necessary liquidation of assets intended for heirs. Other products can provide very efficient means of transferring cash assets to heirs on a tax-advantaged basis and outside probate. Changing Jobs When you change jobs or get a big raise, a review of your insurance is usually a good idea. There are there a several lifestyle and insurance considerations that may come up. As you might expect, when you income goes up, your spending tends to increase as well. While you enjoy an improved lifestyle you may also show increased financial obligations. As your financial stakes increase, you simply have more to protect. If a review of your situation shows you need more coverage, the first thing you’ll want to do is look into what, if anything, your employer provides. Employer sponsored life insurance programs may provide a certain level paid by the employer along with an opportunity for you to buy some additional amount, usually based on your salary level, without having to qualify for coverage. Remember, these employer sponsored policies are usually term insurance that goes away if you leave that company, so they can seldom be relied upon to solve your total or long range life insurance needs. However, as a base amount, or if a chronic health problem makes it difficult for you to obtain coverage in the open market, it can be a valuable benefit. Changes in Your Business Running a small business means you are continuously adapting to change and striving to grow. Any time you experience changes such as adding equipment or inventory, hiring additional employees, or financing improvements or expansion, your protection needs probably change too. Ask yourself these questions:
Life insurance, and disability insurance also, can provide answers for these issues. For more in-depth discussion of how insurance can play a role in protecting and enhancing your business, please go to the Business Insurance section of the website. Changes in Your Marital Status If you were previously married and are now on your own, a complete review of you financial situation is called for, including your life insurance. Going from one household to two, or the passing of your spouse, can affect just about all of your financial plans. Regarding your life insurance, a myriad of questions and issues can arise:
Depending on the complexity of your spousal and dependent relationships, in addition to the assistance of an insurance professional, you may need the advice of an attorney and accountant to make sure your affairs are properly structured. Supporting Aging Parents Today, people are increasingly finding themselves helping to support their aging parents, financially and otherwise. If your parents are dependent upon you for financial assistance, what would happen if you were no longer there? In this situation, by including your parent’s needs into your life insurance planning, you can assure they will continue to receive the support they need. |