Life tends to change as you get older. When it does, you may find that your financial goals and needs change as well. You may increase your emergency savings as your income rises. Or you may become more conservative in your investment strategy as you approach retirement. As your life or mindset changes, you may want to also adjust your financial strategy.
Life insurance should be an important element in these periodic reviews. Your life insurance policy provides protection for your family against financial challenges resulting from your death. Your need for coverage may change as your life changes. In fact, you may find that you need to change your coverage amount or possibly even switch to another type of policy.
There are some instances that should clearly trigger a life insurance review. For example, marriage or the addition of a child could mean you need more coverage. However, there are other situations in which a life insurance review may not seem so obvious. Below are three such life changes. If these sound familiar, it may be time to review your life insurance protection.
Retirement may seem like the perfect time to drop your life insurance coverage. After all, you may have purchased life insurance to support your spouse and children in the event that you pass away. If you’re no longer working and your children are grown, what’s the point of keeping your policy?
However, life insurance can still serve an important purpose in retirement. For example, it’s possible that you could face substantial medical and long-term care costs in the final years of your life. Such costs could drain your assets. Life insurance could help your spouse replenish his or her savings after you pass away.
You could also use life insurance to create a legacy for your loved ones. You could leave a death benefit to pay for your grandchildren’s education or to help your grown children retire. You could even leave money to your favorite charitable cause. Just because you’re retired doesn’t mean you don’t need insurance.
Starting a Business
Entrepreneurship can be a thrilling and fulfilling experience. It can also create its own set of challenges. Your business may be heavily reliant on your skills, knowledge and effort. If you pass away, the business could falter. Life insurance could help your family or business partners keep the business afloat after your passing.
If you have business partners, you may want to consider a buy-sell agreement funded by life insurance. Every buy-sell is different, but the general idea is that if you die, your partner gets life insurance proceeds that he or she can use to buy your share of the business from your family. The business keeps going, and your family gets compensated for your work.
Divorce is a complex and exhausting process that can impact every corner of your financial life. During this busy time, don’t forget to review your life insurance. You may not need as much life insurance protection after your divorce. On the other hand, if you have children, you may not be confident that your former spouse can fully support them. In that case, you may want to maintain a significant amount of coverage.
Also, don’t forget to check your beneficiaries. Too many people make the mistake of keeping their former spouse on their insurance as primary beneficiary. If you do, he or she will receive the benefit upon your death, even if that wasn’t your intention. Make sure your beneficiaries are correct, and consider setting up a trust as beneficiary for your minor children.
Ready to review your life insurance strategy? Let’s talk about it. Contact us today at Bridgeriver Advisors. We can help you analyze your needs and objectives and determine which type of coverage is right for you. Let’s connect soon and start the conversation.
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