Life Insurance to fit your stage of life

Life Insurance to fit your stage of life

According to the Life and Health Insurance Foundation for Education (LIFE), life insurance should be considered at every stage of life – single, young family, established family and pre-retiree/retiree. Here is what they recommend for each stage of life:

• Single people - the rule of thumb here is, if there are those who depend on you financially, such as aging parents you might help support, life insurance would certainly be appropriate protection for that financial assistance in the event of your death. Another good reason for life insurance would be if you had substantial debt you didn’t want to burden your family members with in the event of your death.
• Young families – if you, as the breadwinner, were to die, would your assets be enough for your family to maintain the style of living they have become accustomed to? If the answer is no, life insurance proceeds should be enough to allow your family to continue the lifestyle you have provided them with. It can also help with longer term needs, such as college education for the children and retirement funds for the surviving spouse.
• Established families – my clients often tell me they won’t need life insurance after the children are grown and out of the house and assets have grown to the point where they can be self-insured. While many find out that accumulating enough assets to be self-insured is a much larger task than they had expected, even with an accumulation large enough, they find the needs for life insurance shift from the purpose of income protection to that of asset protection. Most realize that it would be difficult for their heirs to liquidate the assets comfortably and, therefore choose to keep life insurance for that purpose.
• Pre-retirees/retirees – at this stage, there are many reasons to have life insurance. If you are fortunate enough to have accumulated a large estate, life insurance can be used as a vehicle to ensure a smooth transition of assets to the next generation, without burdening them with estate taxes. If you don’t have a need for this type of protection, perhaps you can use life insurance to pay off your mortgage or bills or to cover final expenses.

At each stage, you should work with a financial professional who can help you select the right product to ensure the proper protection for your family.