How you plan today will determine how your family will live tomorrow.
Financial planning is an integral step to attaining peace of mind. When it comes to life insurance, an all-important cog in your financial plan, your needs may differ depending on where you stand in your personal and professional life at a given point of time.
There are various life events and stages that may affect your life insurance needs. It’s important to consider these stages to understand how life insurance planning plays a role in your financial plan.
Life insurance is not a “one and done” process. Your needs can change as quickly and as often as the circumstances of your life change! You should take a look at your policy every year to make sure your coverage fits.
Read the following scenarios to learn about some of the reasons you may need to reevaluate your life insurance needs.
Life Insurance Planning Stages
Planning a Family?
Just a heads up: the financial responsibility arrives even before the baby does! You need life insurance, whether you’re trying to get pregnant, currently are pregnant or a new parent. Life insurance will be the single most important purchase you make to secure your child’s financial future.
The cost to raise one child from birth to age 18 is now over $240,000. This doesn’t even cover college! Are you prepared for these huge expenses? What if something happens to you? How will your family survive? Life insurance will help you protect your children’s financial future.
Married couples share everything, right? This partnership means you depend on each other both emotionally and financially. You both need a financial plan that includes life insurance. Make sure that both of you have enough life insurance to cover the loss of your individual financial contributions if one of you were to die unexpectedly.
Even if you or your spouse becomes a stay-at-home parent, life insurance should be a major part of your financial plans, as the following video explains:
So, you’ve finally bought your own home. It’s a big step and a big financial responsibility. Do you have a plan to cover the cost of the mortgage if something were to happen to you or your spouse? If you died today, would your surviving spouse or family members have the means to cover the cost of your mortgage or even pay it off completely? What about other expenses like maintenance, utilities, unexpected repairs and property taxes? A well-thought-out life insurance plan would allow them to keep the house you bought together.
The Debt Factor
When your life is running on credit, it increases the need for life insurance. You need a life insurance policy that will cover outstanding balances, especially if a loved one is a co-responsible party on a loan, credit card, etc. When you’re creating your debt management plan, make life insurance a part of it.
Finally got that promotion you’ve been hoping for? Congratulations! Keep in mind, when your income increases, so does your need for life insurance. Why? Because when you have more money coming in, you tend to spend more. Additional life insurance coverage will allow your family to maintain their new standard of living. Remember, experts suggest having a life insurance policy that is 10 to 20 times your annual salary.
Caring for Aging Parents
It’s your turn to take care of your aging parents. There’s a good chance that they’ll live into their mid-80s. Will they be able to take care of themselves financially or will they need you to chip in? Think about what would happen if you died prematurely. Healthcare, housing or long term care – make sure these expenses are calculated into the total face value of your life insurance policy.
Yes, life insurance can take care of your business, too. That’s why it is important to reevaluate your life insurance policy every time your business goes through a phase of change (becoming more profitable, acquiring more debt, hiring employees at key positions, etc.).
The video below talks about some of the reasons life insurance is critical for small business owners.
Changes in Marital Status
In the unfortunate event of the death of your spouse or a divorce, it’s a good idea to take a fresh look at your coverage. You may not need as much coverage anymore. But if you have kids, remember, their financial security is still a top priority. If you remarry, you may need to change your beneficiary information and update your policy to accommodate the financial needs of your new spouse.
Planning for College
These days the cost of a college degree is staggering. Your kids’ education will help them stand on their own feet. Make sure your life insurance plan is adequate to cover the cost of housing, tuition, books, etc., even if you’re not around to see them go to college.
Retiring in Peace
Plan well (and early) for your retirement and you greatly improve the likelihood that you’ll live in peace when your working days are over. Life insurance should play a significant role in your retirement plan. The right policy will provide for your loved ones who may not be able to live comfortably on your retirement savings alone.
How Much Life Insurance Do You Need?
To determine how much would be enough, calculate your predicted expenses and your family’s future needs. These may include:
- Household expenses
- Living expenses including mortgage or rent
- Educational expenses
- Emergency needs
- Outstanding debts
- Funeral expenses
Calculate it Yourself, or Consult an Expert
Life insurance should be viewed as the replacement of your income when you’re gone. How long will loved ones rely on your income? The younger your children, the more income your family would need to replace if you passed away. To get a broad idea about your needs, try using our Life Insurance Calculator. Consider going one step further: we suggest talking with one of our life insurance experts to analyze your needs more thoroughly. Call 800-442-9899 or click on the red Get Started button.