STEPHEN SMALENBERGER, EA ®

[Video] Life Insurance: Should I or Shouldn’t I?

Here are a few questions around life insurance: Should I start, maintain, or stop a life insurance policy?

Here are two different situations with different life stages and we will analyze the role of life insurance to help answer these questions!

Starting A Family:

They’re in their 20s.  When asked the question do you owe someone or love someone?  We find out they have some existing debt. They want to start a family soon and maybe even adopt children.  And during this time they want to save for a down payment on a home.

They do have some potential things in their life coming up that would warrant having life insurance.  One reason for life insurance is to replace income should one spouse pass away. With life insurance you could eliminate any debt and help cover expenses until your children are older.

Getting some type of life insurance whether private or through your employer will help to cover this risk of loss during the ages where your children are young and your family is growing.

With an employer life insurance policy you often receive a multiple of your salary, whether one or two times your salary.  As long as you work for your employer you receive that benefit. But if you leave or are laid off that benefit goes away. What we would suggest is getting a quote for a private insurance policy that you purchase outside of your employer from an insurance agent that is for a term of years.  This term can be one of many options, 10, 15, 20, 25, or even 30 years. In this example you would want to get insurance coverage for the length of time when your kids are under your care and until your mortgage or debt paid off.

Family Grown and Near Retirement:

They’re near retirement and in their 50s.  As your life insurance is nearing maturity does it make sense to keep or renew it?  Their kids are grown and mortgage is almost paid off.

You don’t need to replace income as you have assets saved to replace any financial need your spouse may have.  At this point life insurance also becomes more expensive. You can self-insure at this point. The need for life insurance is small if there’s any.  So unless you have a specific reason to keep it you may decide it’s unnecessary now.

Some other questions to consider are:

• What’s going on in life right now?
• What are you saving?
• What are you trying to replace or recover?
• What risk are you trying to avoid?

Should you have insurance?  That’s really up to you to decide.  But think of what happens if you didn’t.  Consider how you could purchase insurance early on, when it’s usually inexpensive, versus the time to save for having enough to cover any loss.  What are you leaving your spouse and your family exposed to? For an annual premium you can shift the risk away while it’s cost effective.

Wondering how this affects your investments? Schedule a call with Michelle and Steve to discuss your portfolio today.