Life insurance has been called the foundational strategy of building and protecting your net worth. The initial stages of your financial strategy should include adequate life insurance coverage. The following tips will give you a template for your life insurance planning for a lifetime.
Term life insurance is affordable protection when you are young. When young, term insurance coverage offers the lowest cost per thousand dollars of coverage. It comes in various renewable periods, for example, 5-,10-, 20-year term and term to age 100.
- Upon each renewal of term insurance, the cost increase and may have a final term period ending at a certain age, such as age 65, 75 or 100.
- Many term plans can be converted to permanent life insurance coverage without medical evidence that will continue to cover you for the duration of your life.
Life insurance can pay off significant accumulations of debt. Many owe thousands of dollars on their mortgage-related debt, credit cards or a large amount of business debt.
- Term life insurance often solves debt concerns. It can offer you the peace of mind that you will not be saddling your family with ongoing debt.
- If you own a business, you and your partners can enter agreements to redeem debt or buy business interests providing cash to your heirs.
- Debt-free succession plans can infuse cash into a business can help a succession plan to work well.
Your life insurance plan can change to adapt to your needs. Review your life insurance during each of the stages. Our circumstances change dramatically, and so do our needs for life insurance. It may be time to review your life insurance and verify beneficiaries, policy amounts, and riders associated with the plans. As you evolve financially, so do your life insurance needs.
You can protect your family when you have young children. When you are newly married and starting a family, life insurance is purchased to provide tax-free capital if one of the parents dies.
When your children are going to college, protect your liabilities. Many of us tap into our savings to help meet our children’s tuition and housing expenses. We may purchase a child’s first car or pay them an income for one or more years. If you die without providing continuing support, your young adult child may need to quit seeking a higher education due to a shortage of funds to pay for tuition and expenses.
Special Estate Planning Solutions: There are life insurance solutions when your estate faces a large tax bill, or you desire to leave a large sum of money to an heir or a charity. The death benefit proceeds can solve estate-related problems such as paying an estate’s tax liability on capital gains.