8 Critical Times In Life You Need Life Insurance
Seems where life insurance is concerned that many simply don’t understand when do you need it the most? It’s a question I’ve been asked many times. I usually address that question based on where someone is at that moment in their life. But lets go a bit further and identify the 8 most critical times you need life insurance the most.
You Need Life Insurance For…
Immediate Family Considerations
- When we have family needs that require our income and or support to be continued if we were not here. Consider the ongoing needs and obligations for a stay at home spouse, children, goals like education and home purchase.
- Special needs children or loved ones have life long needs for care and financial support. You need to think about who will take care of them when you are gone? Who will pay for their needs? A special needs trust and a funding source like life insurance can accomplish this.
- A properly designed life insurance program can cover expensive obligations like mortgages, autos and other financial debt in the event of your death.
Special Spousal Considerations
- Are you a married military employee? Or for a company offering a pension type retirement? Consider a Permanent Life plan. If you plan to work till a full retirement the earlier you consider a permanent life plan the better. It can act as an offset to taking a reduced retirement with survivor benefits. You can save yourself and family an immense amount of money. Providing more income to your spouse if you die in a tax favored environment. Additionally, if your spouse dies before you, you may be entitled to a 100% refund of your premiums. You could also receive living benefits for Chronic and Critical care.
Long Term Financial Considerations
- Long term goal planning should have a life insurance component. I consistently hear people comparing returns on life insurance to money invested in the stock market or a retirement account. You must understand that they are not really comparable items in such simple terms. Retirement by itself is what we call an un-funded goal. It’s not fully funded until much later in life, at or near retirement. Consider what happens if you unexpectedly have your life cut short well before retirement. You have only had time to invest in your retirement for maybe 5 years. If you were able to contribute $100 per month your account might be worth $6,000 to $12,000. Depending on how good the market had been. So, your family has not only lost your income but your retirement is far from funded. That same $100 could have provided $1,000,000 or more if you were young. Even if you were a bit older, it could have provided $250,000 to $500,000+. That would make a big difference compared to only investing in retirement. Don’t misunderstand, I’m not suggesting you don’t fund your retirement. What I’m trying to show you is you should have a balanced approach… a bit of both.
End of Life Considerations
- The government is aggressively changing the tax environment. Those who have done well financially could be facing a huge tax burden at death. Life insurance can provide huge liquidity in a tax favored way to settle non liquid estate taxes. With a bit of preplanning, your loved ones won’t be forced to quickly liquidate your estate at auction prices. They will have the benefit funds to pay for estate taxes and other immediate obligations.
- Being able to make substantial charitable contributions is another benefit of having life insurance. Many people are unaware of the potential financial power of life insurance. Many charities receive their largest donations as gifts of life insurance. And the great news is, your premiums may qualify as a charitable gift.
- The top need for life insurance is simply because you love someone. If you were suddenly gone, it could have a financial and long standing impact on them. It’s important for you to remember that life insurance is not purchased for yourself. However, you do get that amazing feeling of protecting your loved ones from the unthinkable fact that you may not always be with them. Life insurance is one of the most selfless gifts you can set in place for your loved ones. Rest assured, when they are hurting the most, it will allow them time and resources to mourn. They can stay on the path for a brighter future all because of YOU!
If you have questions about how to incorporate Life Insurance into your financial planning to protect your loved ones please don’t hesitate to call Chris Wilson at (619) 980-7263.
