Life insurance is a valuable financial product that can provide both short- and long-term protection for those you love. The type(s) of coverage that suits you best, however, depends on your unique situation and needs.
Buying the Right Life Insurance Policy
No matter which stage of life you and your loved ones are in, there is value to be found in owning a life insurance policy. That is especially true if you have others depending on you — like a spouse, children, and/or aging parents — who would be financially impacted by your passing.
Of course, simply purchasing life insurance coverage isn’t enough. You also need to ensure that you are buying the right policy for your needs, at the right time and for the right price. In some cases, that may mean adjusting your coverage as time goes on and your needs change, or even combining multiple policies for certain phases of life.
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Life Insurance for Short-Term Financial Protection
Nearly everyone can warrant purchasing short-term life insurance coverage at some point in their lives. Term insurance — with its defined, temporary coverage period and generally affordable rates — can be ideal for those who have finite financial needs, especially in the younger adult years before retirement.
This includes parents with minor children, homeowners who are still paying down their mortgage loan, or anyone with shared debt (such as co-signed student loans or credit cards). You may also use a short-term life insurance policy to replace your lost income for a remaining spouse, cover future expenses for your kids (think college tuition, weddings, or a down payment on their first home), or even contribute to a charitable cause you deem worthwhile.
By buying short-term life insurance coverage, you can ensure that those you’d leave behind are protected against sudden financial hardship in the most cost-effective way. Of course, term life insurance doesn’t last forever, so it’s imperative to build a policy that not only lasts long enough but also provides a sufficient death benefit.
Not sure which policy to buy? LeapLife makes it easy to get between 10 and 40 years of term coverage, by matching you with personalized life insurance policy quotes from their network of premium carriers. Making sure you are matched with the right carrier for you may save you up to 40% on the cost of your life insurance.
Life Insurance for Long-Term Financial Protection
While term life insurance provides protection for a specific phase of life — when you may need it most — permanent life insurance can offer coverage until you’re old and grey.
Though permanent insurance coverage is more costly than temporary coverage, there are many great benefits to consider. The first is that whether you buy a policy in your 20s or in your 60s, you will be protecting your loved ones (and your estate) for the rest of your life. In fact, many of these policies don’t expire until age 121.
Long-term policies typically build a cash value over time. This balance, which often accrues interest, can be drawn from to cover premiums later in life, act as an added retirement savings vehicle, or even provide you with long-term care coverage as needed.
With permanent life insurance coverage, you’ll be protecting those you leave behind whether you’re 27 with small kids, student loans, and a mortgage, or 72 with grown children and no debt. And because life insurance proceeds generally pass directly to beneficiaries (versus going through the probate process), they can be an easier and tax-efficient way to transfer wealth to your loved ones.
Do You Need Term Life Insurance in Retirement?
Most financial plans are set up so that as one nears retirement, they are merely tying up loose ends. Ideally, the children are grown and financially independent, the mortgage is paid off, there are sufficient funds in retirement savings, and there is no more student or credit card debt to worry about.
Because of this, some believe that term life insurance isn’t really that valuable in the years immediately preceding retirement. For many, though, this in-between period of time may actually warrant short-term life insurance coverage as much as ever.
Once the house is paid off and the kids are grown, many working adults begin redirecting their savings efforts toward bulking up retirement accounts. The last five to 15 years before retirement may actually be some of the most impactful, especially if you plan to take advantage of catch-up contributions beginning at age 50.
If you or your significant other were to pass away during that final savings stretch, though, it could be detrimental to the remaining spouse. Without those last years of dedicated savings, your loved one could be forced to delay his or her own retirement. If there are any larger expenses remaining — such as unforeseen medical bills or the mortgage on a newly-purchased forever home — a short-term life insurance policy could be a saving grace.
For many, it makes sense to at least hold onto short-term life insurance coverage until retirement savings are complete… even if the “typical” term life insurance needs of your younger years are no longer a concern.
Final Thoughts
Financial needs are different for each and every family. You may find more value in term life insurance than whole coverage, prefer to only pay into a permanent policy, or might even combine multiple policies to protect your loved ones through various stages of life. Either way, whether you’re in the midst of your family-raising years, working to pay off debt, or are entering retirement, life insurance could be an important part of your financial plan.
If you need help deciding which policy to choose — or how much life insurance coverage you need to protect your loved ones — LeapLife makes that process an absolute breeze. Through LeapLife’s online platform, you can buy up to $5 million in coverage. Or, you can chat over the phone with an agent if you need an even larger policy.
Just answer a couple quick questions and get matched with personalized life insurance policy quotes from their network of top carriers like Banner Life, Prudential, and Pacific Life, just to name a few Once you choose the one that works best for your needs, some carriers will let you finalize your policy completely online (even letting you forgo a visit to the doctor).
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This content was provided by LeapLife. Kiplinger is not affiliated with and does not endorse the company or products mentioned above.
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