Life insurance is an important part of planning for the future and protecting your loved ones. But as you reach different milestones, your life insurance needs may change.
As you move through the phases of life like tiles on a board game, it’s important to review your life insurance policy and make sure you’re getting the coverage you need. Here are some life milestones that might cause you to revisit and update your policy.
Let AAA’s insurance agents help you find a policy that’s right for you.
Being Single
“I feel like everybody needs life insurance,” notes Brenda Silva, Life Insurance Specialist at AAA Northeast. “Even students who are attending college and obtaining college loans. It’s affordable to purchase life insurance when you’re young.”
Most young and single people don’t think about life insurance, since they don’t yet have a family of their own. But your single years are a great time to look into life insurance. It can help you plan for the future and keep premium prices down. There are many affordable life insurance options at this time that can lay the groundwork for your financial future. A great way for young and single people to start their life insurance journey is by looking into term life insurance.
Term life insurance offers a fixed premium that provides coverage for a predetermined period of time. The longest a term plan will extend is typically 30 years from the issued date. It offers a more limited scope of protection, but it’s often more accessible than whole plans.
How much life insurance do you need? Learn more about the difference between term and whole life insurance.
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When your marital status changes, your life insurance needs might change as well. If you’re getting married, you’ll be combining your finances. If you’re getting divorced, that might change your financial situation as well.
While rates won’t be as low as they might have been when you were younger, it’s still a good time to start a life insurance policy. If you have a term plan, now is a good time to convert it to a whole plan.
Having Children
With life insurance, you can make sure your children’s needs will be taken care of, no matter what happens. Now is the perfect time to take a look at your life insurance policy and expand it. With your new family, you’ll need to have a stronger financial safety net in place.
The goal of life insurance is not only to replace lost income, but to maintain your family’s standard of living. When you add dependents, like children, make sure that your policy takes that into account. Consider future needs your children might have down the line, like higher education.
Buying a Home
Buying a home is the perfect time to review your life insurance policy and make sure it can cover your mortgage and increased expenses. You don’t want to leave your family vulnerable if the unexpected happens. When you expand your policy, take into account your income, mortgage, other expenses, debts and potential future financial burdens.
Getting a New Job
If you get a new job, a promotion or even face a job loss, your life insurance needs can change. If you get a pay raise through a new job or a promotion, you’ll want to make sure your policy stays up to date. Your employer might provide a life insurance policy, but sometimes that specific policy doesn’t offer enough coverage to meet your family’s needs. Besides, if you leave the job for any reason, you might be at risk of losing the policy entirely.
“If you’re out of employment, sometimes you had employer-paid life insurance and now you’re not working,” said Silva. “Look into having some insurance to fill in the gap for that reason.”
Retirement
Well-funded, whole life insurance policies offer tax-deferred cash value growth that can be accessed in retirement, helping you to transition more easily into your post-work life and plan for your family’s future.
“During your working years, the cash value you build in a life insurance policy can be an important source of back-up funds or ‘opportunity reserve’ — using your policy’s cash value to help fund life moments,” said Timothy Boyle, life and annuity manager for AAA Insurance.
Whether you choose to use the money as an emergency fund, to help supplement your retirement income or to help fund your retirement dreams, the money is available to you tax-free through withdrawals and policy loans.
Planning Your Estate
Your life insurance benefits can ensure that you leave a legacy, like leaving an inheritance, making a charitable donation or covering the cost of estate taxes. Life insurance can also help your family pay for your final expenses, such as funeral and burial costs. In what will surely be a difficult time for your family, make sure that it doesn’t stress them financially as well. It’s not something a lot of people like thinking about, but it’s a beautiful way that you can care for your family even after you’re gone.
Life insurance is an important way to plan for your future, but the future is changing all the time. As you play the game of life, make sure to double-check that your insurance policy is keeping up.
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