Purchasing life insurance can be a daunting proposition, besides the obvious reminder of your own mortality, the cost involved and features and options to choose from can be overwhelming.
But once you make your initial life insurance purchase, your job as an insurance consumer isn’t done. There are many factors in your life that influence how much coverage you should have and these factors change as your lifestyle changes, too.
Below is a list of life stages. Compare where you are — and where you’re going — with the needs detailed with each stage. If you haven’t considered if your insurance meets your needs lately, this may serve as a helpful reminder of the expenses your loved ones will use your life insurance benefit for.
If your needs have changed since you made your most recent life insurance purchase, you may want to consider increasing your coverage amount or adding to the coverage you already have. Even if you have yet to hit the next stage, it’s never too early to begin planning. Evaluating the coverage options available to you and looking around for the best rate will help you be prepared for when it is time to modify your coverage:
- Single without children. You may need life insurance to help your surviving family members pay off any outstanding debt you may have left, such as credit cards, student loans or car loans, as well as money to pay for your funeral costs. Plus, purchasing life insurance while you’re young and healthy is a smart move. As you age, your health may deteriorate, preventing you from getting an affordable rate — or any coverage at all — when you do decide you need protection.
- Married without children. Were you to die, your spouse could use a life insurance benefit to help pay for your final expenses as well as pay down any debt you may have — both on your own or held jointly. Additionally, a life insurance benefit can help your surviving spouse bridge the gap left by your missing income. Without it, your spouse may have to work years longer than planned in order to pay for retirement.
- Married with dependent children. If you died, your spouse would likely need financial help not only to settle your affairs, but also may need an amount equal to several years’ worth of your income to replace the money you previously brought into the household. That may seem like a large sum of money, but your family will use it to: pay off your mortgage; create college funds for your children; pay for child care, now that your spouse is the sole caretaker; and even pay for day-to-day items like groceries, household bills and car repairs.
- Divorced or remarried. Many divorce settlements require that a specific amount of life insurance coverage be maintained for a former spouse. And that amount could be higher if you had a child (or children) with your former spouse. Should you remarry, you would also need to consider having an insurance amount that would meet your current spouse’s needs, as well. And, subsequently, if you have children or become a guardian for your new spouse’s children from a previous marriage, you would need to provide an additional amount that would adequately protect them, as well.
- Married and retired with no dependent children. Many people feel their insurance needs decline as they age, but in many cases an insurance benefit can serve as a way to preserve your estate. You may want to consider providing retirement security to your spouse with a new or increased life insurance coverage amount. With the right planning, your spouse may use your life insurance benefit to live comfortably in retirement as you always planned.
If you’ve added family members since you bought coverage on yourself, you may also wish to check out your options for spouse or dependent life coverage. Many times, this coverage is included in a plan as an optional feature, allowing you to get coverage similar to what you already have for your loved ones.
Life insurance can be a way to protect the important people in your life, no matter what stage you’re in. Make sure you and your loved ones are protected.
Courtesy of The Prudential Insurance Company of America, Newark, NJ.