NEW YORK, Aug. 01, 2022 (GLOBE NEWSWIRE) — Life insurance can provide someone’s loved ones with financial security in the event of death, but the amount of coverage and range of benefits a person needs will depend on what stage of their life they are there and how many people they have to protect.
Here are five major life events that are also good times to reevaluate life insurance coverage.
While it may not be the first thing on their minds, newlyweds will want to make sure their new spouse is protected should anything happen. It can be as simple as adding a spouse as a beneficiary to an existing policy.
Spouses can also consider a new life insurance policy to protect their income. Both people in a committed relationship will likely depend on each other for financial support, and if anything were to happen, it could mean an immediate loss of income.
2. Have children
A baby brings both joy and new responsibilities. They need food, diapers, and tons of supplies. On top of that, parents need to think about other long-term expenses like college.
To ensure the financial security of a new child, parents often have to either reassess their life insurance policy or purchase their first life insurance policy. Ensuring that a child would be financially secure even if something were to happen is one of the main reasons many people buy their first life insurance policy.
3. Buy a house
Finding the perfect place to settle down and start a family is another important step. 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 dies while paying off their mortgage, the family could face serious financial hardship and lose their home. Homebuyers should reevaluate their life insurance to ensure that in addition to covering the loss of income, the mortgage could be fully paid off with the death benefit.
4. Earn a higher income
Most working professionals will not remain at one income level or job throughout their career. There are lucrative annual raises, bonuses, promotions and career moves.
A new job or a big raise is the perfect time to reevaluate life insurance coverage. What a person earned 10 years ago may be far less than what they earn today, and if insurance coverage remains unchanged, this could result in an insufficient death benefit. It may therefore be wise to reassess these figures regularly.
If retirees have a permanent life insurance policy, the cash value component can be helpful in retirement, as it can provide a stable source of funding that can help them weather market downturns and manage taxes.
Retirees may also want to think about what kind of legacy they want to leave for their children or grandchildren, and which foundations or nonprofits have been important to them. Permanent life insurance can also be a great way to plan for that legacy.
The main purpose of permanent life insurance is to provide a death benefit. Using the accumulated value of permanent life insurance to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.
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