Life insurance is an important asset that can be the difference between making sure your family is protected and leaving your loved ones in a terrible situation. While most adults know they need life insurance, they aren’t sure when to buy it or what a policy should cover.
With every change in your life, from getting married and purchasing property to having children, your life insurance needs must be re-evaluated. As you age, your needs and options will also change, making it important to consider all aspects of your life before turning down a great deal or jumping hastily into a policy.
This is one of the first major milestones to consider life insurance, especially if you are the main breadwinner. It may be uncomfortable to think about, but accidents can happen at any age and it’s important to protect your family and your assets. In addition, life insurance is more affordable for young, healthy individuals, making it possible to lock into low premiums early in your life together.
Your responsibilities significantly increase as you and your spouse purchase a home and have children. When your children are young, a life insurance policy is exceptionally important. Many experts suggest a policy that covers five to ten times your annual pre-taxed income in order to keep your family covered for several years should something happen to you.
As you reach your forties, your family and your life are more secure. You likely have a nice home, school-aged children, and a stable income. At this point, your life insurance policy should be focused more on the future than the present. Should something happen to you, life insurance will be a valuable tool in paying off debts, offsetting the loss of potential future income, contributing towards costs of your children’s education, and adding to retirement savings.
As you get older, your needs in life continue to change. Retirement is on the horizon, your children are grown and (hopefully!) out of the home, and your main focus is on building a legacy and planning for your later years in life. At this age, most adults have adequate savings and are preparing for lower retirement income, but this does not mean life insurance is unimportant. Life insurance should ensure coverage for a family’s expenses, make additional funds available for paying death-related expenses, or create a foundation for adult children and/or grandchildren.
Life insurance serves different purposes throughout your life, but is consistently an important safety net that is well worth the investment. Whether you’re just beginning a family or are re-evaluating your current life insurance policy, understanding the role life insurance plays for you may be critical to your family’s wellbeing, both today and decades down the road.