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When asked how life insurance is used, most people say that it provides for loved ones and final expenses in the event of a breadwinner’s death. Certainly, life insurance serves that purpose better than any other financial product. And, it does so much more. For each stage of life, each financial situation, and just about any financial goal, life insurance can help.
Life phase 1: Getting started, building financial assets
Building financial security is a long-term undertaking. Few of us are fortunate enough to have complete financial security as young adults. Until you have a spouse, a family, a business, or a mortgage, you probably don’t even think about what financial security really means and why it is important.
However, responsibilities have a way of changing perspectives and priorities. When someone you love relies on your income or depends on you for care, it becomes very important to plan for the “what-if’s.” Life insurance is the first step in providing financial security, and possibly a disciplined approach to savings.
A young family that is just starting to build assets probably needs a different type of life insurance than a retiree. Work with a financial professional to choose the best types of insurance for you and your family. Your advisor will help you decide how much life insurance you need and how to plan for what you might need in the future. An advisor can also help you find an affordable solution for your immediate needs, one that fits in your budget now and positions you for the next stage of your life.
Life phase 2: Looking forward, growing financial assets
As financial stability grows, you may acquire more debt, and more assets, like a home or a business. Salaries increase, and while still several years away, the need for retirement savings is more pressing. Parents also start planning for their children’s future including college education. Family and assets still need protection, but you also need to keep an eye on your future – and your retirement.
The beauty of life insurance is the many ways a combination of insurance policies can protect your family and current assets and while offering you a secure way to build cash to fund long-term goals.
For business owners, life insurance can be used to fund retirement accounts, serve as collateral for a business loan, and provide capital when cash flow is tight. Here too, seek the counsel of an insurance professional to recommend a combination of life insurance products that cover your current needs and provide for guaranteed retirement assets when you need them. A financial advisor experienced in using life insurance for business objectives will offer advice about how to protect business ownership, key employees, and financial assets.
Life phase 3: Finishing strong, relying on financial assets
Later, you begin to focus on funding your retirement and making sure your assets will last the rest of your life. Many people believe that life insurance is no longer necessary at this stage. In fact, financial security is even more important in this life stage. Maximizing the value of assets and the sustainability of your income streams are the most important goals of a secure retirement plan.
Surprisingly, this time of life may present the greatest threat to your assets. Consider the cost of long-term care expenses for example. By 2036, projected monthly cost of long-term care in an assisted living community may be as high as $6,553 or almost $79,000 annually. Unplanned withdrawals of this size can significantly impact retirement assets.
Throughout a lifetime and especially at this stage, life insurance offers many living benefits that can provide financial assistance for long-term care expenses or critical illness expenses. Life insurance can also provide a guaranteed income stream. These examples, and more, are all possible when life insurance is part of a retirement plan.
Is it time for a life review?
Heffernan Insurance Brokers has expertise in all the ways to use life insurance to protect family, assets, retirement, and business. Contact us today for a life review and find out how life insurance can protect what’s important to you.