As a young adult, you become more independent and self-sufficient. You no longer depend on others for your financial well-being. For many young singles, life insurance isn’t a priority. Some would argue that you should buy life insurance now while you’re healthy and rates are lower. This may be a valid argument if you are at high risk for developing a medical condition later in life. You should also consider the earnings you could realize by investing the money now instead of spending it on insurance premiums. If you have a mortgage or other loans that are jointly held with a cosigner, your death would leave the cosigner responsible for the entire debt. You might want to consider purchasing life insurance to cover these debts in the event of your death. As well, you may want to look into a life insurance policy if you are supporting a parent or grandparent or have a child before marriage.
Going to the Chapel
Married couples without children typically still have little need for life insurance. If both spouses contribute equally to the household finances and do not own a home, the death of a spouse will usually not be financially catastrophic for the other. Once you buy a home, the situation may change. Even if both spouses have well-paying jobs, the burden of a mortgage may be more than the surviving spouse can afford on a single income. Credit card debt and other debts can contribute to the financial strain. Again, if you are caring for a parent or have children, life insurance may become increasingly important for your circumstances.
Your Growing Family
When you have young children, your life insurance needs reach a climax. In most situations, life insurance for both parents is appropriate. Single-income families are completely dependent on the income of a breadwinner. If s/he should die without life insurance, the consequences could be disastrous. Both spouses should carry enough life insurance to cover the lost income or the economic value of lost services that would result from their deaths. Dual-income families need life insurance as well. If one spouse should die, it is unlikely that the surviving spouse will be able to keep up with the household expenses and pay for child care with the remaining income.
Moving up the Ladder
For many people, career advancement means starting a new job with a new company. At some point, you might even decide to be your own boss and start your own business. It’s important to review your life insurance coverage any time you leave an employer. Keep in mind that when you leave your job, your employer-sponsored group life insurance coverage will usually end, so find out if you will be eligible for group coverage through your new employer, or look into purchasing life insurance coverage on your own. You may also have the option of converting your group coverage to an individual policy. This may cost you more, but may be wise if you have a pre-existing medical condition that may prevent you from buying life insurance coverage elsewhere.
If you and your spouse divorce, you’ll have to decide what to do about your life insurance. Divorse raises both beneficiary issues and coverage issues. And if you have children, these issues become even more complex. If you and your spouse have no children, it may be as simple as changing the beneficiary on your policy and adjusting your coverage. However, if you have children, you may want to make sure that they, and not your former spouse are provided for in the event of your death.
Your Retirement Years
Once you retire, and your priorities shift, your life insurance needs may change. If fewer people are depending on you financially, your mortgage and other debts have been repaid, and you have substantial financial assets, you may need less life insurance protection than before. It’s also possible that your need for life insurance will remain strong even after you retire. For example, the proceeds of a life insurance policy can be used to pay your final expenses or to replace any income lost to your spouse as a result of your death. (i.e., from a pension or Social Security). Life insurance can also be used to pay estate taxes or leave money to charity.
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