It’s important to review your life insurance on a regular basis, because life insurance is not intended to be a “purchase a policy and forget it” type of financial instrument.
Throughout the stages of your life, there are life changing events like marriage, a baby and retirement, all of which should cause you to rethink your life insurance coverage needs.
So what type of life insurance do you need for each stage of your life? Let’s take a look!
Your single years
The basic purpose of life insurance is to provide financial protection to your dependents in the event of your untimely death. So if you are single, and without dependents, you may think that you do not need life insurance, but there are some things you should consider.
Questions you should ask yourself:
- Do you have loans secured by a cosigner who would now have to make the payments?
- Who will be paying for your funeral and burial expenses?
- Will anyone be burdened financially in the event of your death?
- Do you want to lock in your insurance premiums when you’re younger and the premiums are lower?
If you answered “Yes!” to any of these questions, you should consider purchasing life insurance.
Marriage
You now have a partner and are a unit. In this stage, you want to make sure that if one of you passed away, the other can maintain their current standard of living. Without proper life insurance, this may not be possible.
Questions you should ask yourself:
- Do you want your partner to worry about how they will pay the mortgage or bills?
- Would the surviving spouse be burdened financially by your death?
- Would your surviving spouse be able to pay for funeral and burial expenses without tapping into savings or other assets?
If you answered “Yes!” to any of these questions, you should consider purchasing life insurance.
Birth of a child
During this special time in your life, it’s normal for emotions to run from extreme excitement to considerable worry. Think about how your family would manage if you or your spouse passed suddenly. What if the unthinkable happens and you have to cover funeral and burial expenses for your child? Or maybe you just want to give your child the gift of peace-of mind and financial flexibility. Whatever the reason, life insurance should be top of mind during this life phase.
Questions you should ask yourself:
- If you have life insurance, is it enough? Will it last through as your kids grow up?
- If you don’t have life insurance, will you or your spouse be able to maintain the same lifestyle if something were to happen to either of you? Kids can be expensive, and they seem to cost more as they grow! Try to estimate the future cost of raising a child when shopping for life insurance.
- Would you like to create a legacy to help pay for your child’s education, first car, etc?
- Would you be able to cover funeral and burial expenses if something terrible were to happen to your child?
If you answered “Yes!” to any of these questions, you should consider purchasing life insurance.
Empty nest
Your kids have moved out and are supporting themselves. So you don’t really need much life insurance, right? Not exactly. Maybe you don’t need as much. Or maybe you just need a different type of life insurance policy. It’s time to talk to an expert and reevaluate your life insurance needs.
Questions you should ask yourself:
- Do you carry any debt that your surviving spouse will be responsible for?
- Is there enough in savings to cover funeral and burial costs?
- Have you cosigned on any debt for your children?
- Are your children relying on you to cover any college expenses?
- Have you talked to a financial advisor about estate planning and the tax advantages of life insurance? For example, life insurance death benefits can be used to pay estate taxes instead of having to liquidate assets at an inopportune time.
If you answered “Yes!” to any of these questions, you should consider purchasing life insurance.
Retirement
Just because you’ve retired doesn’t mean you stop planning for your financial future! In fact, you probably should take a closer look as you roll into your retirement stage.
Questions you should ask yourself:
- Do you still carry significant debt that may be passed on to your children or estate?
- Does a pension account for a significant part of your/your spouse’s retirement income? If so, will the pension benefits cease after death?
- Does your life insurance have a cash value? Maybe it can be used to supplement your income.
- Is there enough in savings to cover funeral and burial costs?
Summary
Many people are unaware that their life insurance needs can change as their lives change. So it’s important to adjust your policy depending on what life stage you are in.
There are many life insurance options available. Some provide a death benefit that you can’t outlive and also build a cash value over time. Others provide temporary coverage at a more affordable rate. And, life insurance premiums get more expensive as you age so the sooner you speak to an expert, the better.
Arbor Insurance Group provides life insurance, homeowners insurance, auto insurance and other personal and business insurance products throughout the Lehigh Valley, including Allentown, Bethlehem, Easton, Emmaus, Macungie and surrounding areas.
