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HomeBlogThe Life Stages of Insurance

As we start a new year and a new decade, it’s time to begin spring cleaning and wipe the dust of your insurance policies. Insurance policies, one time thought of as a “set it and forget it” investment, have evolved over the years into more complex solutions that give way for additional planning and opportunities to further strengthen your financial fitness.

Knowing your insurance needs and where your points of vulnerability are is crucial. Different stages of life can significantly alter the insurance needs of your family. To begin to identify vulnerabilities for you and your family, start by asking yourself the following.

• What would happen if I was no longer here to support my family?
• What if I became sick or injured and my income was greatly reduced?
• What will happen if my spouse or I need the service of a long-term care facility in retirement?

Unexpected life events can derail your net worth in a very short amount of time because the cost of these events can be catastrophic and, in some cases, are unable to be covered even with meticulous planning and savings. As you navigate through the various stages of life, it’s important to know what types of insurance can be applied to cover your needs.

Early to mid-career: Income Replacement
Often times term insurance is the appropriate choice during this stage. It will diminish over time as your assets grows and your family matures. Term insurance can be a lower cost solution for large insurance coverage because it is not permanent and will expire after a certain period of time. It is important not to underestimate your needs, especially if you have a family. Often the 2x salary coverage most employers provide is not enough to keep your family financially secure. The loss of income and savings will impact your retirement age, college savings and overall lifestyle. We all hope term insurance is the worst money we ever spend because that means it never gets used. Being prepared for the unexpected can help keep your family from experiencing financial disruptions while dealing with a loss of a loved one.

Early to late career: Disability Planning
In addition to term insurance it is important to have enough disability insurance to cover your salary and any bonus compensations in the event you are no longer able to work. It is important not to assume your work coverage is enough for your life and disability insurance needs. Most employer-based coverage is available only up to 60% of your salary. If a meaningful part of your overall income is bonus compensation or commissions, you are particularly vulnerable to being under insured, as employer disability coverage only covers your salary. A supplemental disability policy is necessary to help minimize the financial impact on you and your family.

Mid to late career/early retirement: Long-Term Care
Planning Long-term care planning is a cost that is on the rise. Specifically states with larger aging populations can move the costs well above the national average. The insurance available to cover these costs has evolved greatly over the past two decades. It is no longer a “use or it lose it” type of insurance. You can obtain policies that will provide long-term care if you need it or with a death benefit to your family if you don’t. Long-term care insurance can also provide as much, or as little coverage, as you need or can afford. With the advancement of modern medicine, people are living much longer than they have in the past. Protecting your quality of life should be considered when planning for all your life goals.

All stages: Legacy and Tax Planning
Many people have intentions to leave a legacy to their family, and often, that can be a very defined amount of money. Utilizing a permanent insurance policy can be a great way to carry out your legacy while having minimal impact on your lifestyle. It is also a wonderful planning tool to help alleviate the burden of the federal estate and state estate/inheritance tax by replacing the assets that are recaptured through taxation. When your desire is to maximize your legacy to your family, insurance can often be an efficient way to achieve those goals.

No matter what life stage you are in, insurance should be considered for asset and family protection. Your wealth advisor is here to assist you in determining your insurance needs and to make recommendations on the most advantageous way to cover those needs.

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