Major Life Events and Their Impact on Life Insurance
As your priorities change, so does your need for life insurance.
When life gets really busy, you may put aside what you think can be accomplished later. But those big life events are also reminders to plan for your years to come.
Life insurance should be an important part of your peace of mind—both for now and the future. And whether you already have life insurance or are considering it for the first time, it’s important to know how it can help protect you through life’s twists and turns.
Here are some major life events and how they impact your life insurance needs:
Some private student loans aren’t forgiven after death. If you’re carrying significant debt, using life insurance to cover the remaining loan balance and interest can help ensure the debt isn’t passed on to family members.
Life insurance can help you feel assured that you or your spouse can be taken care of should the unexpected happen. And the amount you need shouldn’t only be based on salary: Insuring a spouse who doesn’t earn income can help offset the costs of their valuable responsibilities, such as child care, if you’d have to hire someone to cover those tasks.
Among life events, buying a home is likely the biggest purchase you’ll make—so you want to make sure your family can stay in the home should something happen. Term life insurance offers coverage for a specified time—such as 10, 20 or 30 years—making it a popular option while paying off a mortgage. On the flip side of this life event, paying off your mortgage can signal a reduction in your life insurance coverage.
With many group policies, your life insurance through work may end when you stop working for your employer. And since there’s no guarantee that your new employer’s policy will meet your needs, this is a life-events trigger to consider an individual life insurance policy in addition to any employer-provided coverage.
If your long-term plans include helping your children with college expenses, owning sufficient life insurance for each parent can help provide continuity and fulfill that dream if the worst happens. You can also consider getting life insurance for your child: Since rates are based primarily on age and health, buying life insurance for someone who is young and in good health allows you to lock in competitive premium rates.
While the kids may be living on their own, you can still help plan for their future through your estate. A life insurance policy can help them pay the taxes on any inheritance.
If your spouse outlives you by 10 or 20 years, life insurance can help them maintain their current lifestyle. Annuities are a helpful supplement to retirement planning, especially if you want to have guaranteed retirement income.