When Americans think about their financial futures, many focus solely on their investment strategy. The question most often asked is, "How will they reach their financial goals for retirement, college for children, and other long-term needs?"
Life insurance is a cornerstone of financial planning because investment plans usually assume that you will live to your life expectancy, so your income will continue to be generated until retirement. But what happens if the family breadwinner meets and untimely death? How will your children fund their college education? How will your spouse live in retirement? What happens to the assets you've accumulated if there is no insurance to cover everyday expenses?
A life insurance policy can help cover immediate expenses and can provide long-term protection of the assets you've earmarked for your family's future. For example, insurance will help pay for final expenses, such as unpaid medical bills, funeral expenses and estate settlement costs. And, life insurance can help provide the money to meet the ongoing costs of running a household — without dipping into savings and depleting assets needed for the future.
The Death Benefit proceeds — from a properly structured life insurance policy received by your beneficiary — are generally free from Federal income tax and can help put the children through college and continue building a retirement nest egg for loved ones.
Keep your insurance up to date with your changing needs
It's not enough to buy a life insurance policy once and forget it. As our lives change, we need to re-evaluate our insurance coverage to ensure that it continues to meet changing needs.
Consider the following questions:
- How long ago did you buy your life insurance? Were your family circumstances different?
- Have there been changes in your family's income, savings, debt or financial goals that could impact your insurance coverage needs?
- If you have term coverage, what is the duration of the coverage? Will it be long enough to provide protection until your children are through college? Will it help protect your spouse's retirement assets?
- Do you anticipate any significant changes in your financial situation?
- Have you reviewed your insurance in light of your long-term savings goals?
- Who is your beneficiary? Is this who you want to get the proceeds today? Can this beneficiary manage the cash provided by the life insurance?
As you consider these questions, take time today to review your present life insurance coverage. Talk to your financial professional about reviewing your existing coverage to determine if it is adequate to help assure a sound financial future for your family.
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