It can be easy to forget about life insurance when you have competing financial priorities, especially when you are younger. Life insurance is an important tool for your financial well-being.
Protecting your loved ones has always been important. This is even more so now that the COVID-19 global pandemic continues its devastation of households and raises the question about mortality. Although life insurance is not a topic that sparks conversation at dinner, it can be an important stepping stone to financial wellness.
1. Financial success in your 20s
When you are just beginning your career, it can be daunting to enter the workforce and plan for the future. A good financial plan should include investments such as an IRA or a 401 (k) plan. Life insurance is also important in order to protect your savings and pay off debts. Life insurance is something you should consider, even if your spouse or children are not involved. If you have co-signed student loans with your parents, or if your parents are unable to pay your long-term care costs, or if your parents are struggling to provide for you, life insurance might be something you should consider.
2. In your 30s: Major life changes
These life events are more likely to occur in your 30s, such as getting married, purchasing a house, having kids, and seeking promotions. These changes are more likely to occur in your 30s, making it even more important to establish financial health to help cover future costs and build financial security. Changes like these also require more protection, including that which is provided by life insurance–particularly at this age when life insurance remains very affordable. Many people start families in this decade. While expectant parents may feel financially stressed, it is important to consider how life insurance can help protect a young family as well as provide financial security.
3. You may need to make some alterations in your 40s
What about those clothes you wore in 20s? They won’t fit you in your 40s unless you make some adjustments. The same goes for your financial plan. Your goals as a young adult have likely changed over the years. This is the time to assess your savings and determine if you have enough life insurance. According to the National Association of Insurance Commissioners (NAIC), people over 50 often ignore their insurance policies. It is important to review your coverage periodically to ensure that it is current and relevant to changes in your financial situation or family composition.
4. Looking for the prize in your 50s or early 60s?
Many people in this age group are retired, their kids have grown up, the house has been paid off, and the future looks bright. However, this is not true for everyone. Others might have children later in life, while others may have worked multiple jobs over their career, or might have health-related problems. These and other factors can make it difficult to save and invest. There are also many options for life insurance that can be used for business succession, income replacement, estate tax payment, or retirement income replacement.
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5. 65+: Goals have been changed
When people turn 65, the financial plan that was established in youth should continue to yield benefits. With so many unpredictable changes in life, financial plans should still be in place. These plans should include retirement income, full- and part time employment income, as well as Social Security benefits. A financial strategy that includes life insurance can include protection for surviving beneficiaries against any debts, estate taxes, funeral and burial expenses, and life insurance can be a part of it.