How Long Do I Need Life Insurance Coverage?

Deciding how long you need life insurance is an important part of the buying process.  You want to make sure you are covered while you are most financially vulnerable.  This is usually when you are young, raising a family, paying a mortgage and saving for retirement.   Once these ‘life milestones’ have passed, you will no longer need coverage in most cases.  Here are some ‘life milestones’ you can choose to determine your length of coverage.

Your Youngest Child is Financially Independent – Raising children can be quite expensive.  Once your youngest child is financially independent, usually around 25 years old to be on the safe side, your financial obligations should subside.

Your Mortgage is Paid Off – Your mortgage is usually the biggest financial obligation you will take on in life.  Owning coverage that lasts as long as your mortgage does makes sense in some cases.  There are 30 year term options available.

Retirement – This is probably the milestone that will give you the most thorough term coverage duration.  Once you retire, it is likely that will have paid off your home, your children will be financially independent and you will have saved a retirement nest egg.  If you pass away at this point, there will most likely be minimal financial impact on your loved ones.

Do You Need Permanent Life Insurance Coverage? Before you consider permanent coverage, ask yourself if there truly is a permanent need.  For most people there is not, but in some cases it might make sense.  Permanent coverage can be a useful planning tool in some cases.  For instance, you can purchase a small permanent policy in combination with a larger term policy to cover final expenses.  If you have amassed a large estate that will be subject to estate taxes, permanent insurance can be an effective planning tool. You could even use life insurance to provide funds for a special needs child when you are no longer around to care for them.  Permanent life insurance is much more expensive than term coverage, but accumulates cash and provides coverage that lasts a lifetime.  We can help you decide which type of insurance is right for you.

If you are trying to figure out your life insurance plan, we can help.  We can perform a complimentary analysis of your situation to help you decide the best length of coverage for your situation.  Give us a call at 877-205-4172 or email us at info@termlifeanswers.com for a no obligation consultation.

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