When you're shopping for life insurance to protect your family, it's important to consider where you are in life, and what kinds of financial obligations you have. The right policy for you will depend on several things:
- your marital status
- your dependents
- your financial obligations
- your career stage
- how you want to pass your property onto the next generation.
All of these factors will affect the kind of policy you choose, as well as the amount of coverage you need. Let's take a closer look at how to choose a policy based on your life stage.
Life Stage: Just Starting Out
In the "starting out" stage of life, you're just beginning your career and family. You might not have children or other dependents yet, but that doesn't mean you have no obligations. For example, if you paid for your college education with student loans, you might have had a cosigner for your loan—maybe your parents or a grandparent. The same may be true of your car loan. If you were to die before the loan is paid, your cosigner would be obligated to pay the debt. Under law, a cosigner is responsible for full payment of a debt in the event of default. Death doesn't erase the debt obligation. A life insurance policy would need to cover at least the amount of these financial obligations.
Life Stage: Taking Care of Aging Parents
Although you may not have a spouse, your death could still have a serious financial impact on your other family members. If, like many adults, you're supporting your parents either financially or with care, your death could have a major impact on them, both emotionally and financially. They would not only lose the support you've been providing to them, but they'd also have to find the money to pay for your final expenses. At a minimum, you'd want your policy to cover any potential final medical expenses plus burial expenses.
Life Stage: Children of Your Own
If you're a single parent, the primary financial support for your children would die with you. If you're lucky, you may have family members who would step in and help your children if you died. If you're even luckier, they will be able to provide your children with the education and lifestyle you'd hoped for them to have. Your need for life insurance as a single parent is even greater than that of a dual-parent, dual-income household, which would still have one income if one parent died. Life insurance is a cost-effective way to make sure that your children are protected financially should anything happen to you.
Life Stage: Empty Nest
Just because your children have grown up and left the nest doesn't mean you have no need for life insurance. You may have spent your entire adult life building an estate that you intend to pass on to your children, grandchildren, or favorite charity. You can use life insurance to ensure that the bulk of your estate passes to your heirs or designated charitable organization subject to certain tax advantages.
Putting It All Together
If you need help figuring out how much coverage you need, you're not alone. That's why I'm here! I can help you figure out how life insurance fits into your overall financial plan, including savings and retirement, as well as tax and estate planning. It can be hard to see the big picture, and that's why many of my clients need a little help. They know they need to protect their income, but they haven't thought about retirement planning yet. Let me show how life insurance brings all your financial objectives together.