Life insurance can provide someone's loved ones with financial security if they pass away, but the amount of coverage and range of benefits that a person requires will depend on what stage of life they're in and how many people they need to protect.
Here are five big life events that are also good times to reevaluate life insurance coverage.
1. Marriage
While it might not be the first thing on their minds, newlyweds will want to make sure their new spouse is protected if something happens. This may be as simple as adding a spouse as a beneficiary to an existing policy.
Spouses may also consider a new life insurance policy to protect their income. The two people in a committed relationship will likely rely on each other for financial support, and if something were to happen, it could mean an immediate loss of income.
2. Having Children
A baby brings both joy and new responsibilities. They need food, diapers, and tons of supplies. On top of this, parents need to think about other long-term expenses like college.
To ensure financial security for a new child, parents often need to either re-evaluate their life insurance policy or get their first life insurance policy. Ensuring that a child would be financially secure even if something were to happen is a key reason many people get their first life insurance policy.
3. Buying a Home
Finding that perfect place to settle down and start a family is another big milestone. For most homebuyers, this is one of the biggest purchases they will make in their lifetime, and the majority of home purchases come with a mortgage.
If one member of a couple were to pass away while they were paying back their mortgage, the family could face seriously financial strain and may lose their home. Homebuyers should reevaluate their life insurance to make sure that, in addition to covering lost income, the mortgage could be fully paid off with the death benefit.
4. Earning a Higher Income
Most working professionals won't stay at one income level or job throughout their career. There are annual raises, bonuses, promotions, and lucrative career changes.
A new job or big raise is a great time to reevaluate life insurance coverage. What someone earned 10 years ago may be much less than what they're making today, and if insurance coverage is left unchanged could lead to an insufficient death benefit. So, it can be a good idea to reevaluate these figures regularly.
5. Retirement
If retirees have a permanent life insurance policy, the cash value component can be useful in retirement, as it can be as a stable source of funding that may help them weather market downturns and manage taxes.
Retirees may also want to think about what kind of legacy they want to leave to their children or grandchildren as well as any foundations or nonprofits that have been important to them. Permanent life insurance can also be a great way to plan that legacy.
The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.
Contact: michael.bertini@iquanti.com
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Original Source: Northwestern Mutual: What Life Events Affect Life Insurance?
