As a newlywed or new parent, how much life insurance is enough to protect your family? The answer can vary depending on individual circumstances according to Gary Lardy, CEO of IntelliQuote Insurance Services (www.intelliquote.com), a leading online life insurance agency. According to Lardy, major life events trigger the need to periodically evaluate your plan and consider the future financial support your family may need when you are gone.
“Millions of Americans are underinsured primarily because they have not purchased life insurance according to their life changes,” said Lardy. “When determining coverage, it is important to ensure your policy is adequate as you move through various stages of your life. A good rule of thumb is to evaluate your coverage with your broker or agent every two or three years, at a minimum.”
Life insurance can help families cover everyday expenses, such as food, clothing, utilities and the mortgage.
Top 5 Factors To Consider:
- Marriage: Now that you’ve found “the one,” protect their future. When considering your policy, review your monthly expenses, your spouse’s future income, your combined future plans and how you can ensure you have a policy that will allow your spouse to take the time to grieve and get organized.
- Home Purchase and Debt: Life insurance can be used to cover every day expenses, but it can also help offset the costs of larger investments such as a home. It may help ensure your spouse or surviving partner will be able to stay in the dream home you’ve both worked hard to build. Additionally, if you have accumulated new debt with credit cards or installment loans, consider how much life insurance would be necessary to cover ongoing payments or provide overall debt relief.
- Children and Dependents: From diapers and childcare to food and clothing, consider the appropriate amount to cover daily and long term expenses for all your dependents. According to www.BabyCenter.com, the cost to raise a child, from birth to age 18, is approximately $304,722. This number does not take into account college tuition. According to www.CollegeBoard.com, the total cost for a 4‐year public (in‐state) school is $87,743, not considering the college cost inflation rate of 5% per year. Likewise, if you are supporting aging parents, consider their financial and healthcare needs if something were to happen to you.
- Career Change: If your income changes dramatically, it may be time to reevaluate your life insurance needs. To keep pace with an enhanced lifestyle shift that often comes with pay increases, your policy should be reviewed as well. If you’re living up to your new means, you should also be providing enough coverage to support your family’s lifestyle in the case of an unexpected passing.
- Retirement: Guarantee you have provided for your spouse to live comfortably in their spending years of retirement by providing a sound policy to provide ongoing financial support. With the proper amount of coverage, your spouse can enjoy the same standard of living and not be unrealistically burdened with final expenses—from medical and funeral costs to debt such as a mortgage, car payments, loans and credit cards.
According to Scott Hanson, principal at Hanson McClain Advisors (www.hansonmcclain.com), an independent investment and financial advisory firm, life insurance is a critical consideration when planning your financial future. “As your financial goals and needs change, it is important to review your life insurance needs to secure your family’s future,” said Hanson. “The first step is to work with a licensed insurance agent and independent financial advisor to create a needs analysis and plan.”
The best time to purchase a policy is when you are young and healthy—rates will be lower and in some cases there is a wider variety of insurance company options. Also, work with a licensed insurance agent to consistently review your policy to ensure that it remains in line with your family’s needs and make adjustments accordingly.
“Typically premiums for life insurance increase with age, and can double between the age of 35 and 45 for a healthy, active individual,” said Lardy. “For those individuals who have chronic medical conditions—such as asthma, thyroid disease or high cholesterol—or those with a family history of serious medical issues like cancer or heart disease; it can be more difficult and expensive to purchase a policy.”
To determine how much you or a loved one may need, begin with a life insurance needs assessment. IntelliQuote offers an easy life insurance calculator to help you get started. For access to an immediate online life insurance quote offering a variety of company and coverage options, visit IntelliQuote (www.intelliquote.com).