Understanding Life Insurance at Different Life Stages

What is Life Insurance? It seems like a simple question. However, life insurance can be extremely complicated, and the options can be overwhelming. Life Insurance covers a wide range of products and comes in many types and forms. It is important to gain an understanding of what life insurance is and how it applies to different people and situations. Once you have that, you can make an informed decision about which type is the right one for you and your family.

At its most basic level, life insurance provides a cash benefit to your heirs upon your death. This money is not subject to income taxes and can be used in any way it is needed. Properly configured, life insurance can provide your family with financial protection long after you are unable to do so. Your life insurance requirements will vary according to your situation and stage of life. Fortunately, there are a variety of policies available to meet your current and future needs.

Your life insurance needs progress as you age. They start out with a smaller need when you are very young, growing as you mature and acquire more responsibility, then diminishing in later life.

Below you will find a brief description of several life stages, and a suggestion of their life insurance coverage needs:

Single

Although there may not be anyone who depends on you financially, obtaining insurance is not unimportant at this stage of life. For example, a long illness prior to death can deplete your savings leaving insufficient funds for funeral expenses. This could cause a hardship on parents or siblings left behind.

Married

Once you are married, your need for life insurance grows. In addition to providing for funeral costs, and other end-of-life expenses, increased obligations such as a mortgage and credit card debt need to be covered. You’ll want to ensure your spouse can maintain the same quality of life you’ve provided.

Married with children

After the arrival of children, you will want to insure that their future needs are met if you’re not around. Your life insurance needs to be increased to cover the costs of their upbringing, education, your mortgage, and additional income your spouse may need to keep a similar quality of life.

Retirement

By this time, your children are grown and your mortgage has likely been paid. You are ready to relax and enjoy life. Your life insurance requirements are much less than they have been in the past. You’ll mainly want to make sure your funeral expenses, any credit card debt, and medical expenses are covered.