M. Frederick State Farm Insurance Presents: 11 Life Events that Require You to Rethink Life Insurance


11 Life Events that Require You to Rethink Life Insurance

Life Insurance: two little words that have such a big impact on the future. Most people don’t like to think about it, nonetheless, talk about it. Reasons that the topic is avoided include the perception that it’s complicated, confusing, and expensive. Then there are the non-credible companies that have created a bad rap for the industry, leading some to believe that the coverage is a hoax. Many people believe they won’t qualify. Almost everyone has trouble considering their own mortality, or the idea that they would ever really see the payout from a policy.
While all of these concerns are valid, none of them should stop you from considering this important step in taking care of your loved ones. The good news is, there are many options and living benefits to life insurance that can help you take care of multiple goals at once and provide you with peace of mind for the future.

1-Graduating from College
Have your parents cosigned on your student loans, auto loan or first apartment? If something happens to you, they will be on the hook for the balance. Start your adult life out on the right foot and take out a term policy to cover your loans, with your parents as the beneficiaries. Once the loans are paid off or they are no longer cosigners, you can change the beneficiary if needed, and most companies allow you to convert or add coverage to suit your evolving life needs.

2-Getting Married/ Codependent Living.
If you are living with someone that depends on all or a portion of your income to keep life going, it is important that you take care of this person for the long run by putting a policy in place in case you don’t come home from work one day. The amount of coverage for this policy should include consideration for things like housing costs, living costs, insurances, and any outstanding debt. The same concept applies if you are getting a divorce, and your agreement deems you financially responsible for children or another party. A term policy can be a very affordable option to take care of this immediate coverage need and provide you options to convert the policy to a more permanent benefit in the future as your needs and budget allow

3-Buying a House

A big decision and hectic process! When you go to the closing table there will usually be several different kinds of insurances you are required to have in place before taking ownership. All of those are for the bank. Before you move in (and life gets even busier with renovation projects) put something in place that protects your family and their ability to stay in the home if the unexpected should occur. A policy to cover your outstanding mortgage amount typically equates to a reasonable premium that you would consider part of your new regular housing expense.

4-Starting a family.
This one is a no brainer. When you have a child, it is your responsibility to ensure they are taken care of even if you are no longer around. Anyone who has raised a child knows how much money is required just to keep them fed, clothed, sheltered, and cared for in addition to all the extra expenses that may come along. They depend on you for everything. It is imperative to secure coverage that will provide funds to take care of them into adulthood if something should happen to you. One further consideration is getting coverage on a stay-at-home parent. While they may not earn income or work outside the home, consider the cost of having to hire someone to do everything that parent does if they were no longer around.
Do not risk putting this responsibility solely on the one parent, or anyone else who would gain custody of the child in your absence. Paired with a valid and updated will, life insurance is an important part of family estate planning. As a parent, it’s easier to rest at night when you know that this part of the picture taken care of.
Additionally, starting a life policy on a child is a fantastic way to set them up for their future! This is a popular option for grandparents, but highly recommended for whoever is planning for the child’s future. You would secure their medical eligibility and start building value within a permanent policy at a super affordable rate that would stay in place for the entirety of their lives. That child will thank you someday when it is time for them to start their own family!

5-Job Changes.
We often hear “I have life insurance through work”. While that is a great benefit to have, it is rarely enough to cover a person’s true coverage needs, and there are often hidden restrictions to transferability and individual ownership within the group policies. Group life insurance can take months to pay out a claim, and proceeds can be subject to income taxation (whereas personally owned policies are not). People are changing jobs more than ever, and employer expenses are on the rise. Don’t have your family’s life insurance coverage solely reliant upon your employer. You never know when you will leave a job, or your employer will leave you. Benefit packages can change on a whim, often in a way that best serves the employer (not the employee). If you are considering changing jobs, it is a great time to put a program in place that you own and control and have one less variable to consider when choosing your next place of employment.

6-Income Changes.
Have you recently taken on debt? Has one spouse decided to leave their job and stay at home? Is money tight and the family is living paycheck to paycheck? While it seems impossible, this is an important time to put a life policy in place. There are many affordable options available to cover outstanding debt and household needs. It may be tough to fit in another monthly bill but try to find a non-necessity that could be cut out of your expenses to make sure you have some life insurance in place. If money is tight now, imagine what will happen to your family without you around? If you can find even $30 per month to spare, you can take care of this lingering fear and put steps in place to start moving forward.
On the flip side, if you suddenly have an increase income it is important to not fall victim to “lifestyle inflation” without taking care of the basics first! There are many types of life insurance policies that provide options to save and grow money while also providing death benefit coverage if things don’t go as planned. A wonderful program to put in place if you have some extra income, and like anything regarding life insurance (and saving), the earlier the better!

7-Starting a high-risk hobby.
Buying a motorcycle or a snowmobile? Taking up skiing, boating, climbing, diving, or hunting? Get a life insurance quote.

8-Starting a Business.
Self-employment is one of the hardest and best things a person can do for themselves. More than ever, everything depends on you. Take a piece of your worries off the table by securing an income for your family if something happens to you. Create a pension plan for yourself through cash value life insurance, and a way to grow access to funds without utilizing bank loans.
Business planning is also a consideration. Many banks require life insurance policies to secure commercial lending. Key Person life insurance can be utilized as a business continuation strategy to make sure the operation can go on without you and compensate a partner for your contributions if you pass away prematurely. Additionally, offering to pay for life insurance policies can be a great component of a benefits package and tool to retain top employees.

9- Planning for Retirement.
What will your tax liability be when you retire? How much of your savings is in tax-deferred vs. after-tax programs? Are you able to transfer your part of the employer’s group life insurance coverage to an individual policy? If something happens to you will your spouse still be able to retire? Do you have funds immediately available to others to take care of funeral costs Do you worry about transferring money to family members without having to lose a portion to estate or gift taxes?
Permanent life insurance can help minimize the amount of tax liability you will owe in retirement and ensure that you cannot outlive your retirement savings. Rather than protecting your family from you dying too early, there are types of policies that protect you from living too long. Discuss these questions with your life insurance agent, financial planner, and tax professional far ahead of time to position yourself for success.

10- Saving for College.
There are types of life insurance policies available to help you achieve multiple goals at once! A “return of premium” type policy could be thought of as a forced savings account. Every penny you pay in premium is given back at the end of the term if the death benefit is not used. This allows you to have life protection in place while also meeting a savings goal, such as children’s education. Cash value permanent insurance policies are another way to grow money over time while also having life protection in place when your family needs it the most.

11-Receiving an inheritance or leaving a legacy.
Have you received a sizeable inheritance and you’re not sure what to do with it? Consider a single premium (paid up) life policy to preserve and grow that money, have access to the money if needed, and increase what goes to the next generation. It’s a win-win! 

Even without a large chunk of money, a permanent life insurance policy is a “when” not an “if” benefit payout. Do you want to change the course of your family’s story and create generational wealth? Have you always dreamed of funding a charitable cause, or having a building named after you? Maybe you want to make sure your family buys a sailboat or takes a trip around the world. Whatever your dreams look like, you can ensure that it happens through legacy gifting via affordable life insurance options.

The best time to start a life insurance program is yesterday. The second-best time is today. Policy options and rates are dependent on health and age. There are many ways to ensure that your family is taken care of while achieving living goals at the same time with life insurance. Life is full of curveballs and many things are beyond our control. Life insurance is truly love insurance, and its better to be a decade too early than one minute too late.

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