These Three Milestones Will Tell You
For the most part, we tend to file life insurance policies under the category of “Things we know we need but no one likes to talk about.” Why? Considering your life insurance policy automatically brings to mind your mortality, and it’s a proven fact that people just don’t like to discuss that topic. Yet, taking steps to make sure your loved ones are covered after your death isn’t just considerate. It’s also smart and can make all the difference in the financial protection that your family receives in both the short and long-term.
However, with so many policy options and so many opinions swirling on which one is the best and which one you need, it can be easy to become overwhelmed. To simplify the matter, let’s discuss three life milestones that can directly affect if you need a life insurance policy or if you should make changes to yours. Using these steps as a guide, you can better understand how to navigate the insurance world and when to take appropriate action.
1. Did you get married?
You may think that when you marry your significant other, the biggest burden you’ll receive is picking up those clothes that inevitably fall right beside (but never into) the hamper, or maybe a lifetime of snoring. Yet, the reality is that when you get hitched to someone, you’re also automatically connected to that person’s debts as well.
If you both make enough money to cover those expenses, all may be well. Yet, if one party dies, it could leave the other ill-equipped to handle the responsibility on his or her own. To avoid this fate, creating a life insurance policy is an important step to take as soon as you get married.
Another reason that marriage is a good time to consider a policy is that when they’re just starting out, many newlyweds haven’t amassed a significant amount of savings quite yet. As such, it can make end-of-life expenses difficult to pay. Considering that the average funeral can run around $10,000, that could be a major setback for a couple who was just finding their financial footing.
In most cases, term life insurance policies are the best bet for young spouses. In comparison, whole life insurance policies (which includes burial insurance or final expense insurance), are often purchased by senior citizens aged 50-85 years old who don’t anticipate needing a large amount of life insurance.
2. Did you buy your first home?
Owning your own home is a great investment and one of the most financially smart things you can do with your money. Yet, it can also be one of the biggest debts you undertake in your life. Moreover, you may be paying on that piece of property for longer than you originally thought. According to a recent study, the average home-secured debt carried by a 65-year old American rose 47% from 2003 to 2015.
To this end, if you just purchased a home and undertook mortgage debt, it’s important to establish a life insurance policy as soon as possible to make sure that, in the event of your death, your loved ones aren’t saddled with those costs. The alternative is that your home would eventually be sold if funds left behind aren’t sufficient enough to make the monthly payments. Worse, your mortgage lender could foreclose on the home. To truly get started down the right path, remember to couple your term insurance policy with an aggressive mortgage payment plan.
3. Did you just have a baby?
According to the USDA, the average baby costs a family more than $233,000. While they’re incredible miracles, there’s no denying that children can be expensive. As such, if you’ve just had one, now is a great time to get a life insurance policy if you don’t have one. If you do, it’s time to update it.
First, there’s the issue of the added expenses you’ll incur over the course of parenting your children. From doctor’s visits to the school and myriad charges in between, your cost of living just shifted. That may mean you’ll need to up the amount of life insurance you carry. You may also want to adjust your policy terms to include all of your children as beneficiaries.
It’s important to also consider the addition of a child against your long-term financial goals as parents. In addition to saving for major life events like college, you may also need to adjust your retirement savings plan, your investment portfolio, and more.
Ultimately, deciding to create a life insurance policy is a personal decision, but an important one to make. While not everyone may see the immediate benefit in going through the motions, especially when they’re young and healthy, there’s no denying that it’s a major step in the right direction toward securing the financial freedom of those you cherish the most.
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