Life Insurance for Every Life Phase

February 04, 2020
family-life

Life insurance is an important financial planning tool – but it’s not actually one single tool. There are many different types of life insurance, and they have different advantages and disadvantages. What works well for you in one phase of life may not be the most suitable option in another phase. As your needs change, your coverage may need to be updated.

Life Insurance for Children

Buying life insurance for children can seem strange at first, but there are some practical benefits. Sometimes people (often the grandparents) purchase permanent life insurance for a young child. While this policy could cover funeral expenses if the child were to pass away, this is not generally the primary intention.

A permanent life insurance policy, such as whole or universal life insurance, can last for the entire length of the insured’s life, as long as the premiums are kept up with, and purchasing one early can lock in good rates. These policies also accumulate a cash value that can be borrowed or withdrawn for any purpose. If the policy is purchased for a very young child, it will have time to accumulate a cash value as the child matures, and the cash value may be used for any purpose, such as paying for college or putting a down payment on a first home.  

Life Insurance for Young Adults and New Parents

Adults often need life insurance to guarantee that the people who depend on them are taken care of no matter what. At the same time, adults who are still establishing their careers may not have a lot of money to spare, so they need affordable life insurance options.

Term life insurance can be a great, affordable option. Policies can be written to last for periods as short as five years or as long as thirty years, and with different policy limits.

It’s also possible to purchase multiple policies for different purposes. For example, you might buy one policy that lasts the length of your mortgage and another policy that lasts until your children are grown. This way, you always have just the right amount of coverage, without ever paying for more insurance than you need.

Life Insurance for Established Adults

Older adults may be more financially stable, but they also need to think about their retirement plans. Permanent life insurance can help.

Although permanent life insurance tends to be significantly more expensive than term life insurance, it offers the advantage of no expiration date. It also accumulates a cash value that can be accessed during your retirement years. Some whole life insurance policies may pay annual dividends as well.

Life Insurance for Seniors

Beneficiaries do not typically have to pay taxes on life insurance proceeds, making life insurance an attractive estate planning tool. Seniors with permanent life insurance policies may wish to keep them in force. However, if seniors need cash, the policy’s cash value can be accessed through a loan, a withdrawal or even the surrender of the policy.

Seniors who don’t have a permanent life insurance policy and who don’t need a large policy may decide to purchase a small life insurance or burial insurance policy. These policies can cover final expenses so that surviving loved ones do not have to worry about these costs.

Some policies also have “living insurance” riders which allow the death benefit to be accessed while the insured is still living to pay for medical expenses or long-term care expenses.

Your Life Insurance Needs

Life insurance policies vary significantly. Not all policies accumulate a cash value or provide annual dividends. Costs and benefit amounts can also vary significantly. Before purchasing a life insurance policy, understand how it works, and make sure it fits your unique needs.

Interested in learning more? Contact the Heffernan Insurance Brokers’ Life Insurance Division.