The 4 stages of life:
Most people don’t understand the need for life insurance, when they need it and which type of life insurance policy to go for. What you need to understand is that your insurance needs shift depending on what stage of life you are at. Keeping your life insurance policies in sync with your life stage makes things a lot easy. Unfortunately many families are under insured.
This article will cover the 4 stages of life and the possible types of life insurance options at each stage.
You are fresh out of college, young and single, why need life insurance? You live alone, have no one to support, so the idea of insurance seems weird, who will get the death benefit? All these thoughts result in you overlooking the need for insurance.
But you to need to keep in mind the fact that if you pass away someone will have to take care of your burial and funeral costs. If your parents aren’t that well off, having them to arrange for the funeral while grieving your death is a very scary thought. With burial insurance you have the option to opt for small face values, as little as $1000. Face value is the death benefit that goes to your beneficiaries. The small face value allows you to buy only what you need.
You could also consider a term life insurance if you have any student loans. A plan that offers 20 to 30 years’ worth of coverage should be good enough.
For affordable entry level insurance, go to your employer. Most companies offer employees term life insurance at discounted rates as part of their package. If you don’t have that facility, go to an insurance provider, agent or broker.
Even though you think you don’t need insurance and your family is pretty well off, you never know what the future holds, so buying insurance at this point may be a good idea as the premiums are cheap and your heath is good.
When you get married, you should start thinking about life insurance, even if your partner works. Getting married in itself doesn’t always indicate the need for insurance, but it is the events that follow, like buying a house or having children. Given the fact that insurance gets more expensive as you age, and you may get a health condition that may result in further costly premiums or make you uninsurable, it is better you get a policy when you are young and in good health.
Though whole life insurance is often suggested at this stage, as it not only takes care of the family if something happens to you, it also carries you through your later years, but it may depend on your situation. You can also opt for term insurance as well. Suppose you have a stay at home spouse. A term insurance of 20 to 30 years should be enough for you. If you pass away, your spouse will be left financially struggling.
As in any case, the best life insurance policy is the one right for you that fits your requirements and budget.
With children in the picture, life insurance becomes more important. When considering insurance take into account the cost of raising your child, college tuitions, coverage for a stay at home spouse, etc. You can opt for different types of life insurance, the decision should be based on your needs and budget.
A term life insurance plan may be a good idea. Assuming you are the sole bread earner and your spouse stays at home to look after your child. If something were to happen to you, your wife would be left financially struggling. In the same way, if your spouse passes away, you would need lots of money for child care. A term life insurance plan that covers 20 to 30 years should be enough, as after that time, loss of income and being able to afford childcare won’t matter as the child will have grown up to be self-sufficient and you will have your retirement savings to depend on.
Many people opt for buying life insurance for their children. Child insurance is mostly whole life or term life. Depending on the situation, it can be used to save up for your child’s college tuition or pay for funeral or burial costs if the child passes away. When considering buying insurance for your children make sure you are covering the bigger risks and be sure to get advice from experts.
When buying insurance at this stage, go for the best life insurance policy, a policy that will cover at least the first 18 years for taking care of your children, household expenses and if possible, college tuition. Make sure the coverage is sufficient to allow your family to maintain a decent standard of living. If you already have a policy, it is a good idea to reevaluate it as your situation is probably completely different from when you bought it.
At this stage your children are fully independent and you probably own a home. Though life insurance may not seem necessary, you should consider it if you are married and still working.
If you are retired, you may not need as much coverage. You should still talk to an expert and access the cash value from your whole life policy, if you had any. If you planned well and did not have to face in major financial disasters in your life, your retirement accounts and savings should be enough to take care of you and your spouse.
If you had a term life policy, you probably have outlived it and renewing it will be very expensive. Getting any new life insurance will be costly at this stage, you are older therefore your chances of dying will be higher so you will be posing greater risk to the insurance companies.
You need to keep in mind funeral and burial costs. With funeral costing as high as $10,000, leaving your family to deal with alone can be burdensome. With burial insurance, you don’t have to worry your family for arranging the money for funeral and burial. Burial insurance can also pay for any loans, unpaid bills or credit cards.
There are chances that at this age you have some health condition that won’t allow any insurance provider to insure you, in that case you can go for guaranteed life insurance. You don’t have to fill out any health questionnaires, take no medical exams and are guaranteed instant acceptance. But there is a 2 year waiting period, meaning if you pass away during the first 2 years of the policy, your beneficiaries will receive only the premiums with a little bit of interest. Since the provider is taking more risk with you, the premium costs will be higher.