Reviewing your Life Insurance Needs
Death is as predictable for us all as just about anything you can think of. And while this may be somewhat of an uncomfortable subject perhaps, it is true all the same. Insomuch as we can’t all stay young and beautiful mortality is inescapable and we would be wise to choose a life insurance policy for when that day finally comes.
“You may have invested in life insurance some product years ago and never gave it a second thought,” says Scott Ente, Senior Vice President, Investments at David Lerner Associates. “Or if you don't have life insurance at all and are now considering your options, some of these life circumstances may prompt you to rethink your life insurance needs.”
- Marriage Status
As a single person, life insurance may seem like an unneeded thing, but the day you get married is the day that someone else is potentially depending on your income, or vice versa. If something happens to either of you, your spouse or you will likely need to rely on life insurance benefits to take care of expenses and pay off debts.
Three out of five people own some type of life insurance, and another 34 percent report an interest in making a purchase within a year. If you don’t yet have a policy in place, consider this: 100 percent of Americans have a 100 percent chance of death, making Life Insurance a unique kind of financial product in that every policyholder will qualify for benefits at one time or another.
The amount of life insurance coverage you will want depends on your income, debts and assets, financial goals, and other personal factors. Even if you have some low-cost life insurance through work, this might not cover those needs. Buying life insurance coverage through a private insurer could help get you where you need to be and make up the difference.
2. Becoming a Parent
Becoming a parent changes everything. Suddenly you are completely responsible for the well-being of a helpless and reliant tiny human. It can be overwhelming at times, and most new parents will tell you this if they’re being honest. But once kids arrive on the scene, revisiting your life insurance needs are imperative when you consider the financial needs of your family as you look to the future.
Life insurance benefits might help your family meet both their current obligations, like mortgage, childcare, car payments, and future expenses, including a child's college education. Even if you already have life insurance, children are among the most important reasons to review your policy limits and beneficiary designations.
3. Changes in your Health
One day you might be healthy as an ox, and the next, especially in these strange and unique times of a global health crisis, you may find that your health could take an unexpected turn for the worst.
A common concern is that life insurance coverage will be terminated if your insurer finds out that your health has deteriorated. But if you've been paying your premiums, changes to your health will not matter.
If you’re in great financial shape, and if you’re one of the very few Americans who has paid off all of your debts and feel financially secure, then count your blessings and be thankful for all your hard work and smart financial strategies that got you to this position.
If however, you are not in that lucky position, life insurance can help with mortgage payments, student loan bills, and other obligations. Life insurance protection could still be important if you haven't accumulated sufficient assets to provide for your family, or you want to replace retirement income lost after you pass.
Life insurance can also be a clever tool to help transfer wealth to the next generation. Or if you're looking to pay your estate tax bill or leave something to charity. You may want to keep some of your life insurance in force or buy a different type of coverage.
When it comes to life insurance, your needs will depend on a number of factors, including the size of your family, the nature of your financial obligations, assets, career stage, and your financial goals.
Types of Life Insurance
The two basic types of life insurance are Term Life and Permanent (cash value) life.
Term policies provide life insurance protection for a specific period of time (or “Term”). If you pass away during that coverage period, your beneficiary receives the policy's death benefit.
Term policies are typically available for periods of 1 to 30 years and may, in some cases, be renewed until you reach age 95.
Permanent insurance policies offer protection for your entire life, regardless of your health, provided you pay the premium to keep the policy in force.
Many different types of cash value life insurance are available, and with so many types and options available to you, you are certain to find a policy that meets your needs and your budget, no matter what your personal circumstances may be. Consult with a professional to get all the relevant information and make an informed choice.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
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