If Life Is Always Changing, Why Are Your Financial Plans The Same?

by Alison Robb

Financial Frequency. mySecurity

June 24, 2019 .3 min read

One thing that is certain in life is change!1

Change can happen expectedly or unexpectedly. Whether you’re starting a new job, getting married or divorced, having a baby or buying a new home,  these events can make you happy or sad, relaxed or stressed. But one constant is that they all come with increased responsibilities and obligations that need to be met.

During these times, it can be easy to overlook important financial planning decisions that probably need to be addressed, including protecting these new obligations and responsibilities with the right type and amount of life insurance.

Life insurance provides vital financial protection for your loved ones if the unexpected happens. Simply put, your financial obligations don’t disappear if you aren’t around to pay for them, so it’s best to be prepared.

I know sometimes the “it won’t happen to me" philosophy can get in the way, causing us to pause when we think about buying life insurance, but what if something does happen?  Would all of these new things you’re experiencing in your life, expected or not, be covered?

That brings me to a topic no one likes to talk about – death.

Death is a major life-changing event, especially when it’s unexpected. Death impacts families in two ways – emotionally and financially.

There isn’t much you can do to protect yourself against the emotional impact death causes. The only remedy it time and the support of your inner circle of family and friends.  But life insurance can eliminate 100% of the financial impact of an unexpected death. By taking the time to discuss all the “what if" scenarios, including an unexpected death, you can put a protection plan in place to make sure your loved ones can continue to live a stress-free financial life.

What Are the Primary Types of Life Insurance?

One thing many of us have a hard time understanding are the different types of life insurance and what they can offer. There are two major types of life insurance, term life, and permanent life.

Which One is Right For You?

Term life insurance is temporary protection provided during a specified period of time such as 10, 20 or 30 years.  Think of it this way, term life is like “renting a house", temporary ownership with no equity build-up for you, the renter.

Term life insurance offers the most death benefit protection at the lowest cost and is ideal coverage for people who have debt and other financial responsibilities like a mortgage, children or college expenses.

Permanent life insurance is a type of insurance that covers you for your whole life. An added benefit is that the policy will also accumulate cash value that can be used later in life.

The premium cost on a permanent life policy is higher than term life, but it is level, guaranteed and will not increase as you get older. Permanent life is more like “buying a house", having permanent ownership with equity build-up for you, the owner. It can be used as a way to create gifts to your beneficiaries and can also be used to save for retirement or fund college expenses.

If you are not sure how much life insurance you need, there are calculators available that can help determine the right amount based on your income, assets, debt, and expenses.

As you move on to new and exciting chapters in your life, make sure that those who rely on you will be free from financially worry no matter what curve balls life may throw at you.