If you’re like many young servicemembers, you may think of life insurance as something you don’t need until you’re older. Or perhaps you consider it something that you set up once and never need to change. But subscribing to either of those life insurance myths can have serious financial consequences for you or your loved ones. Let’s take a look at how you can use life insurance in different ways throughout your life to provide protection, security, and peace of mind.
When You’re Young and Single
Without a spouse and children to take care of, you’re likely to think that life insurance isn’t a necessity. But if you have parents or siblings, you may want to consider a policy to at least cover funeral costs. Recent estimates put the average cost of a funeral in North America at somewhere between $7,000 and $10,000.
In addition, if you have debt from college or car loans, or other outstanding bills, an insurance policy can keep your loved ones from being burdened with those expenses. Or perhaps there’s someone important to you: a niece or nephew, friend or relative whom you’d like to provide with a gift.
The great news is, term life insurance policies are very affordable, especially for the young and healthy. It doesn’t need to cost more than a few dollars a month to ensure that you’re not leaving any debts behind or that, if you want, you can leave a legacy to someone you love.
If You Marry
It’s important for both members of a married couple to be insured in the event of the other’s death. Providing for that spouse’s income can allow the surviving spouse to remain in the same home and continue to enjoy the same lifestyle. Even if your spouse doesn’t work, insurance can help to cover the things he or she might do — like housecleaning, shopping and meal preparation, or home and car repairs — in the event you need to hire someone to do them instead.
Many people find there is a gap between the amount of insurance they need and what the Servicemembers Group Life Insurance (SGLI) policy they get through the military will cover. Those with mortgages in particular should look to see how much they would need to cover monthly payments for a significant time period or to pay the mortgage off in full. Supplemental insurance can help bridge the gap and ensure all your needs are addressed.
If You Have Children
Insurance is really about preparing for the future. So children are the main focus of many people’s policies. Being able to afford to send your children to college, set them up in business, or otherwise provide for them if you can’t be there is what life insurance is designed to do.
As you age, the cost of some policies (including Veterans Group Life Insurance) can increase significantly. A level term policy at this time can help ensure your dreams for your children’s futures are covered without putting unnecessary strain on your monthly expenses. Make sure you adjust your policy after each child is born. Also, you may want to consider riders or separate policies that cover your children in order to pay funeral expenses or cover an extended leave from work.
When You Retire
As you get older, your plans for your life insurance will change. Children graduate college and become financially independent. Mortgages are paid off and monthly expenses go down. Many people switch to smaller whole life policies at this point in their lives to cover estate settlement needs.
Of course, if you still have people who are dependent on you or who require significant care, or if your spouse is younger than you, you’ll want to be sure to retain more insurance. As people live longer and the costs of long-term care increase, it’s important to make a realistic estimate of what your loved ones’ future expenses might be.
If You Get Sick
At any point in life, terminal illnesses can strike, wrecking havoc on our savings and finances. Some life insurance policies allow you to take money from your policy lump sum in the event of a terminal illness in order to cover end-of-life expenses.
Throughout your life, knowing you and your family members are covered helps give everyone peace of mind — even if you don’t make a claim on a policy. And when a policy is needed, having it can significantly reduce the stress and worry around what is already an emotional and difficult time.
As life changes, your life insurance policy should evolve and change in order to serve you, and your beneficiaries, best. Your insurance representative can help you determine the type of policy and amount of coverage that’s right for you at each of these milestones.