You might be at a point in your life when you are asking, "Do I need life insurance?" Maybe you've just reached one of life's major milestones like marriage, parenthood, homeownership or retirement. Maybe you're trying to finally get your finances in order. Or maybe you've recently witnessed a close friend or relative struggle financially after the loss of a spouse or parent.
A life insurance policy could help provide financial protection for your loved ones when you're gone — protection that could help them cover final expenses, pay off debt or replace lost income. A policy could also allow you to leave behind an inheritance or donate to charity after you pass away. Life insurance is there to meet the needs of people from all walks of life.
Here, we will explore some scenarios that could help you develop a deeper understanding of the value of life insurance — and decide if a policy could be a good choice for your needs.
Unexpected Life Changes
Change — whether good or bad — is a part of life, but there are ways you could prepare for the unknown. This is something that Stella, a 42-year-old marketing consultant and single mother of two, plans to keep in mind when planning for the future. When she and her husband divorced a year ago, she received full custody of her two young children. Their house was put in her name, and she became fully responsible for making the mortgage payments.
While Stella does receive some child support, her financial responsibilities have increased significantly. Additionally, she wants to make sure she can afford to put both of her children through college. After reviewing the life insurance policy she and her ex-husband purchased when they got married over a decade ago, Stella realizes she wants to change her beneficiary and increase her coverage to provide adequate protection for her new situation.
A universal life insurance policy could be a good fit for Stella and her family because it offers flexibility — as it's designed for a changing future. You can change the amount of your coverage, your premium payments or your death benefit at any time. A universal life insurance policy also builds cash value you can access, subject to the terms of your policy.
Starting a Family
First comes love, then comes marriage — and after the wedding bells have stopped ringing, you might start thinking about a baby in a baby carriage. That's the case for Harry and Aja, who are a newly married couple in their late 20s.
After planning a large wedding and going on a tropical honeymoon, the young couple decides to start living on a shoestring budget. They believe that cutting back could help them meet their goals of buying a home and starting a family. So, they want a life insurance policy that could help them both protect their future family and address their upcoming needs.
Because they're on a budget — and are still uncertain about what the future holds — a term life insurance policy could be a good fit for them. Term life insurance could provide coverage for a period of 10, 15, 20 or 30 years. Some term life insurance policies are also convertible, which means that they could have the option to exchange their term life policy for either a whole life or universal life policy down the road.
Members of the sandwich generation are responsible for caring for both their parents and children, which could cause additional financial concerns. Alex, for example, is a 53-year-old vice president of technology. His two main priorities are his aging parents and his 14-year-old daughter — and Alex is "sandwiched" in between.
Alex wants to ensure that his parents live comfortably as they get older and wants his daughter to go to a top college someday (hopefully close to home). In addition to caring for the needs of his loved ones, he also wants to stay on track with his retirement preparations.
As Alex is concerned about having enough income to live on in retirement, a whole life insurance policy could be a good option for him. With a whole life policy, he would get protection for his entire life. Additionally, this policy type builds cash value — and may also pay dividends, which could be received as cash payments.
A life insurance policy could provide Alex with a sense of security and allow him to focus on preparing for his retirement — while also saving for his daughter's college fund and providing assistance to his parents.
Do I Need Life Insurance?
Reflecting on your needs and goals, speaking to a financial representative — and learning how life insurance might help people in different situations — could help you discover the answer to that question. Now, there's not a one-size-fits-all policy when it comes to life insurance, but learning more about universal, whole or term life insurance could help you find the right choice for your needs.
Your needs might also change over time, and coverage that works for you now might not be sufficient down the road. When life changes, consider periodically examining your life insurance coverage to see if it still meets your needs. A financial representative could help you explore your options.
Peace of mind could be one of the most valuable benefits a life insurance policy provides. Whether you are moving into a new part of your life after a big change or simply getting your financial plan together, a life insurance policy could help you protect your loved ones from the uncertainties of tomorrow.