Your 25 Life Insurance Events
Life Insurance Does Serve A Purpose
Oh no, not again. Every time you call your insurance agent’s office with a simple question about your home or auto insurance they always pop the life insurance question. You know, the question about when is it a good time for the agent to meet with you to discuss your life insurance needs. Why are insurance agents always so pushy about life insurance? Why do they have to ask you about it every time you call their office? Well, maybe because they care about your financial well-being…nah that can’t be it. Well what if it is?
Whether you believe it or not life insurance does serve a purpose. However, survey after survey show that most people do not have enough life insurance. If a financial emergency occurs due to a life changing event many people get into financial trouble because they have no financial back up plan. Life insurance should be that financial back up plan. But most people do not understand that so are unprepared.
Unfortunately due to a common misunderstanding many people think they have enough life insurance since they have a life insurance policy through their employer. So since they are all covered at work why should they buy extra insurance. Their pesty insurance agent must just be interested in making a commission off of them. Does that sound about right? Well, the problem comes in when someone leaves their workplace due to downsizing, quitting or retiring. Most life insurance policies through employers are only in effect while you are employed with them. Since you cannot take the policy with you, if your only life insurance policy is the one you have at work, you would have no life insurance if you left your employer. So you would have a financial gap. Buying life insurance may not be at the top of your list of urgent purchases but maybe it should be.
Many people ignore the obvious until it’s too late. You would regret the day you did have the proper protection for you and your family if some financial emergency occurred. There are many reasons why someone would need life insurance. Events in life are always changing, from births to deaths and everything in between. No one can escape all of the 25 life events listed below. Are you financially prepared for them? Do you have a financial back up plan? Maybe it’s time to consider at least listening to what your insurance agent has to say about life insurance.
Make Life Insurance Your Back Up Plan
#1 – Getting Married
Wedding joy, honeymoon bliss and then your future together begins. When you get married you want the absolute best for yourself and your spouse, right? After the wedding madness settles, look into protecting each other on the financial side with life insurance. You can buy a term or cash value policy. The difference is that a term policy is cheaper because you are not building up a savings account like you do with a cash value policy. Since you just got married and your finances may be a bit tight, start out the cheaper of the two, term. Just be sure to get some type of coverage. You never know what the future will bring. Be prepared.
#2 – New home
Life throws all kinds of situations at us. If you or your spouse meet an untimely death while carrying a mortgage you certainly do not want your house going back to the bank. Mortgage insurance is a form of life insurance that will pay off your mortgage due to death of the homeowner and, or beneficiary. Mortgage insurance is usually cheaper when purchased from your insurance agent vs the bank or mortgage company. A term policy is best in this situation. Check it out, it can’t hurt to get a quote.
#3 – New job
Most employers include a life insurance policy as one of the work place benefits. But remember, you may need to buy some extra outside of work. Most people do not stay with the same employer for their entire career.
#4 – Starting A Family
Yes, you can buy life insurance on children. Yes, you can buy it shortly after they are born too, generally within the first few weeks. And that is a great financial move. It is a perfect way to start saving for your child’s future. In this situation a cash value policy would be the best because it will build up the savings side. Besides, you will never find lower life insurance premiums than the premiums of a child’s life policy. But don’t forget that with a new family you also need to have enough coverage on yourself to provide for your dependents in case something were to happen to you.
#5 – Your Children’s College Expenses
Children grow up so fast. The time to start saving for their college expenses is when they are very, very, very young so that you can take full advantage of the time value of money. The longer your money is invested, the more it will grow. If you invest in a cash value life insurance policy you will build up a fund for their college and also protect them during their lifetime. Because with a cash value policy there are two parts, the savings and the death benefit. Get a quote, put yourself at ease about your child’s future.
#6 – Divorce
As we all know, even with the best intentions, sometimes marriages just do not work out. However, there are still financial obligations. Most financial obligations are spelled out in the divorce agreement. Life insurance is a good way to insure that those financial obligations are met. Divorce is an unhappy time for all, so why complicate the situation more by quarreling about finances. Life insurance is impartial, it will help you meet your obligations and move on.
#7 – Custody and Alimony Payments
If you do have children and get divorced, the best way to protect the future of your children is to protect their finances. Both parents, the custodial parent as well as the noncustodial parent, should have a life insurance policy. If you are the custodial parent and your ex-spouse dies unexpectedly you would lose the child support payments, a life insurance policy will continue those payments. If you are the noncustodial parent you want to have enough money to raise the children in case the custodial parent dies unexpectedly and you then get custody of the children.
#8 – Remarriage
You are starting over, so do the same with a new life insurance policy on your new spouse.
#9 – Grandchildren
Yes, grandparents can be a great financial aid. They usually have fewer expenses and can afford the lower premiums of a child’s policy. A cash value life insurance policy is a great gift for a grandchild. The very low premiums would lock in and the grandchild would be able to continue the policy when they get older.
#10 – Paying For Your Child’s Wedding
Cash value life insurance policies are not only perfect for financing your child’s college education but also their wedding. If you start a cash value policy when the children are very young (when they are first-born is the best) you will have years for the cash value to build up. You will not need the money for their college education for at least 18 years. And probably more than 18 years for their wedding.
#11- Death In Your Family
Funerals are expensive, and there is no way around it. A funeral nowadays can cost anywhere from $7,000 up. A life insurance policy will help you pay for your loved ones funeral without breaking your savings account. You can buy a term or a cash value policy. A term policy insures a person for a certain period of time, usually 10, 20 or 30 years. Whereas a cash value policy can insure a person for up to 100 years of age.
#12 – Job Change
Most employers include life insurance in the work place benefits, but what if your new employer does not, be sure to take care of yourself.
#13 – Job Loss
The life insurance you had at your work stays there when you leave. Do not go uncovered, have a financial back up plan, buy life insurance.
#14 – Reduction Of Income
When we are in our 20’s we usually cannot envision what it will be like when we get older (like our 50’s). Well when you are in your 50’s you cost more. But by the time you are in your 50’s you usually earn more too.The best time to buy life insurance on yourself is when you are in your 20’s and just starting out on your own. It is cheaper in your 20’s and with a cash value policy you will have more years to build up the cash.
So you’ve made it through your 20’s, 30’s and 40’s and you are now in your 50’s. If you ever do lose your job or your income drops and you bought a cash value life policy in your 20’s you would have 30 years of cash value built up in that policy. You can borrow against that cash value until you rebound financially.
#15 – Higher Income
If you have a higher income, higher financial obligations and more people dependent upon your income than life insurance may put your mind at ease. Your financial back up plan should include at least some term insurance to help with expenses just in case something were to happen to you. Your dependents will need that income replacement to maintain their standard of living.
#16 – Supplement Your Retirement
Buying life insurance once you are retired is not too helpful. But buying a cash value life insurance policy at the beginning of your career with the intent of using the cash value within the policy to help fund your retirement is a very smart financial move. This way throughout your career your loved ones are protected with the death benefit and your retirement is a bit more secure with the savings side of the policy.
#17 – Zero Dependents
If you have zero dependents, enough money to cover your expenses and pay off your debts, if you should die unexpectedly, then you would not need life insurance for those basic needs. However a cash value life policy bought at the beginning of your career wouldn’t be a bad idea to help fund your retirement.
#18 – Starting A Business
Most new entrepreneurs are passionate about the business they are starting. Sometimes though, that passion can blur the monetary needs of a start-up business. If you have a cash value life policy with some cash sitting there, go ahead borrow against it. The death benefit will still be in effect even during the loan. And the nice thing about borrowing against a life policy is that you do not have to pay the loan back.
#19 – Business Partnership
If you are in business or going into business with partner buying a “key-person” life insurance policy is the first thing you should do. Think about it, if your partner should die unexpectedly without a financial back up plan, the entire financial burden of that business is on you. If there is a mortgage on the building, it is now your responsibility to pay it. Payroll, inventory and any other business expenses needed to keep the business going will be on you. Life insurance will help you and your business partner sleep better.
#20 – Left-over Debt
Your debt can become a burden. Unless you know when you will die and pay off all of your debts beforehand, you will most likely leave some debts behind. Life insurance can ease the financial burden on your loved ones by providing them with the money to pay off your debts.
#21 – Untouchable In Bankruptcy
Did you know that the cash value in your life insurance policy is untouchable by creditors if you have to declare bankruptcy?
#22 – Pay Off Your Mortgage
You can use the cash value in your life insurance policy to pay off anything you want.
#23 – Stay At Home Parents
If you are a stay at home parent and something were to happen to you, where would the money come from to pay for the responsibilities that you take care of on a day-to-day basis? In the event of your untimely death the breadwinner would still have to keep their job so who would cook, clean, do the laundry, pay the bills, take care of the children and the maintenance of the home? Guess what, the surviving spouse would have to hire someone. And that takes money. For a few pennies on the dollar, life insurance can help replace your financial contribution to the household.
#24 – Estate Taxes
The life insurance proceeds paid to your beneficiaries upon your death are income tax-free. Which is why many people use life insurance to pass money onto their beneficiaries. It may be something to think about.
#25 – Why Not?
Some of these life changing events will probably never happen to you. But even if 3 or 4 do, don’t you want to be financially prepared? By planning ahead you can avoid the financial curse of not having protection when you need it most, in a financial emergency.