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When it comes to life insurance, it can be tempting to think that you don’t need it when you’re young and you really need it when you’re elderly. But there’s no such thing as a ‘one size fits all’ plan. Let’s face it, we’re so much more than our ages. Some of us in our twenties may have high-paying jobs and mortgages while others may be struggling to make ends meet. In our fifties, some of us may have a carefully curated insurance plan while others may have let our payments lapse. So, how do you determine the life insurance plan that’s best for you? The first thing you have to do is think carefully about the people who depend on you, your life goals and your financial situation.
What types of life insurance are there?
When it comes to life insurance, there is Term Life Insurance and Whole Life Insurance. So how do these types of life insurance differ? Well, you can think of term life insurance as renting a house, while whole life insurance is like owning your own home. Term Life Insurance is more affordable; however, it expires after a fixed period of time. This is similar to renting; you have affordable coverage for now but it’s not yours permanently. Whole Life Insurance is permanent and it includes a cash value that can be accumulated over your lifetime. This is like owning your own home, you may have to make more financial sacrifices, but the coverage is yours forever and you can receive further financial benefits as a result.
I’m young… do I need life insurance?
Young people often aren’t thinking about insurance. You feel as if you’ll think about these matters when you’re older. However, young people should invest in health and critical illness insurance where possible since sickness doesn’t respect your youth. So… does this mean that you shouldn’t buy life insurance in your twenties?
Many young people don’t have a lot of disposable income. The key is to start small and build your insurance portfolio over time. Your financial situation will change as your career advances and your priorities will change if you choose to get married and have kids. You can talk to a financial advisor to determine the best type of insurance – life or otherwise – for your unique situation.
However, some young people will be in a position where they can afford life insurance. Your age and health affect the cost of your life insurance premium and so, the younger and healthier you are, the more affordable life insurance will be. For those of you who are in this fortunate position, life insurance can be an investment in your future self.
I’m older… what are my life insurance needs?
Let’s start with a hard one. Some older people may have let their life insurance lapse. In this instance, it’s common to feel a sense of gloom. You tell yourself I was supposed to do take care of myself and I failed. Instead of focusing on the negative, however, you can be proactive about the situation. You can reach out to a financial advisor to find out how you can get your insurance portfolio back on track. Here, we’ll give you the same advice that we gave to the younger folks: start with what you can.
Maybe you’re going to retire soon and your work benefits may be changing or expiring. The first thing you need to determine is what this means for your insurance portfolio. This information is the most important tool in helping you and your financial advisor make decisions on whether your insurance coverage should be altered.
Or maybe you are one of those lucky people who has a healthy life insurance portfolio. You may be tempted to kick up your feet and sit back. You did what you needed to do and you never need to think about life insurance again. But remember, the reasons people get life insurance can change over time. And this can happen when you’re older as well as when you’re younger. For example, maybe you now have five grandchildren, and you want to create a legacy for them. Even if you have a well-developed insurance portfolio, it’s always a good idea to revisit it periodically.
There really is no ‘one size fits all’ plan for life insurance. But there will be a plan that’s perfect for you, whatever your age or financial situation. The most important step is to sit down with a financial advisor to help you determine the plan that will help you meet your goals and prepare for the future.