Life Insurance Needs Can Change Over Time

It’s easy for many of us to approach life insurance with a “I’ll handle that later” or a “set it and forget it” mentality, and to assume that you have time to sort out the details of adequate coverage down the road. Yet, life insurance can play a key role in protecting your loved ones financially should you pass away unexpectedly. The role protection plays in your financial plan often depends on your life stage. Here are several examples of when you may want to evaluate your life insurance options. 

Young adults starting their careers

When you settle into your first or second job and take on responsibility for your own financial matters, you likely are balancing a myriad of priorities. These may include paying off significant student loan debt or managing the mortgage of a newly-purchased home. In the event of your death, you could leave your loved ones on the hook for covering your financial obligations out-of-pocket. A life insurance policy may help provide the cash flow for your parents, siblings or another trusted beneficiary to manage your affairs without it becoming a potential burden.

Newly married couples

As you build a life together with your spouse, it’s likely that your individual financial responsibilities will become intermingled, even if you choose to maintain separate bank accounts. If you die prematurely, your spouse could be drastically affected by the loss of your paycheck and added expenses. Life insurance can help protect the financial contributions of each spouse, helping the surviving spouse carry on without major changes in lifestyle.

Parents of minors or young adults

For many Americans, the need for life insurance becomes top-of-mind following the birth or adoption of a child. If you have or are considering starting a family, now is the time to evaluate your insurance policies, ensuring that you have enough coverage to meet your family’s day-to-day expenses, in addition to future financial goals. You may want to ensure that regular living expenses are covered for your family over a period of years, as well as education costs for children and retirement savings for the surviving spouse. 

Older adults nearing or in retirement

As you accumulate wealth or become an empty-nester, your need for life insurance may decline. Be sure to maintain enough coverage to protect your retirement savings. Once in retirement, the need for a death benefit, which provides annuity or lumpsum payments to the surviving spouse, may become less significant. Certain types of life insurance policies may offer the flexibility to borrow against accumulated cash values to provide cash flow in retirement. Evaluate your coverage against what you anticipate spending in retirement to see if these or other options could help your situation.

Those preparing for the transfer of assets

Depending on the size of your estate, taxes may reduce the amount of assets you intend to pass down to heirs after your death. Life insurance could be one way to protect the interests of family members and other beneficiaries. For example, you could purchase a policy with a death benefit that could provide liquidity to offset the impact of any taxes that would be due at your death. This can help survivors avoid being forced to sell assets to meet tax obligations.

No matter your life stage or financial situation, it’s important to have insurance in place to provide for your loved ones. Make it a priority to regularly review your coverage and ensure it covers the changing needs of your family. If you would like help assessing your options, talk to an insurance professional and financial advisor familiar with your financial priorities.

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Michael D. Lanuto, CRPC®, AWMA® is a Financial Advisor with S.M. Miller & Associates, a private wealth advisory practice of Ameriprise Financial Services, LLC. in Albany, NY.  He specializes in fee-based financial planning and asset management strategies and has been in practice for 7 years. To contact him: 518-949-2039; 4 Atrium Drive, Ste 200, Albany, NY, 12205; Michael.Lanuto@ampf.com; https://www.ameripriseadvisors.com/michael.lanuto/lp/request-contact/3/.