Life Insurance Through the ‘Ages’
By Charlie Conron (Life Design Analysis)
You’re starting out and becoming less reliant on your parents. You may be strapped down with student loans so life insurance isn’t your first priority. If you’re considering buying a home and starting a family soon, or want to ensure your family isn’t left with student debt if something were to happen, consider a Term 10 vs. Term 15. For an average 25-year-old male, $100,000 coverage costs as little as $10 a month. For about a dollar more per month, you can lock in for 5 more years. (Did you know: the average student loan takes 14 years to pay down!)
Welcome to your 30s! Hopefully, you’ve almost paid off that student debt. Now that you’ve transitioned into adulthood and secured that well-deserved job, you can start down the career path. You may have a significant other who you share debt and potentially kids with. Cash is still tight so it’s important you lock into a term policy that fits your needs. If you have a 25-year mortgage, consider a policy to match and stay away from bank-issued mortgage life insurance. Here’s a 35-year-old’s comparison of Life Insurance vs. Creditor Life over the course of the average mortgage length.
Congratulations! Hard work has paid off and you got that promotion! With the increased salary, you may find yourself spending more (and needing more income replacement, if you were not there to produce for your family). If not, you will if you start a family. It’s time to convert some of that term insurance to some permanent coverage. A layered insurance strategy covers short-term needs affordably, but also builds some wealth and permanent coverage for the future. You could also incorporate an enhanced insurance strategy if cash flow is an issue. CI/DI should be included in part of your plan, as well.
Feeling your age is normal. Your 50s may be the new 40s for your golf game, but it may not be the same by the actuarial table. Time to consider converting the rest of that term insurance into something permanent. It’s a critical time in your financial plan to add assets to prepare for retirement. Remember, participating insurance policies can be considered an asset class and part of safe money allocation while also providing insurance needs. CI/DI should be looked at a level cost as opposed to increasing term because underwriting will be more challenging.
The small nagging health issues that you felt in your 50s can turn into more serious issues that take more time to recover from. Combine health with that work schedule you seemed to devour in your 50s (possibly at the expense of that extra gym session). If you have not converted some term insurance to cover your final expenses, it’s not getting any cheaper, so don’t delay. Check out this case study that shows the cost of waiting for even just a few years.
Liabilities may be non-existent now and your kids may be independent. Don’t pitch that policy so fast! You could donate all or part of a permanent insurance policy to a charity and receive a tax benefit. Speak to your advisor on some of the creative ways you could use your insurance policy to give back to your community.
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