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09-02-2009 by Colleen King
Hey I couldn’t make this up. I’m assuming it’s the insurance industry that came up with this, not Hallmark or American Greeting since I haven’t seen any ‘Happy Life Insurance Awareness Month’ cards at the local retailers as yet in the card racks.
But as odd as it sounds, ‘Life Insurance Awareness Month,’ it is important for people to review what they have in the way of life insurance. Needs change over time, since there are times in your life when you need more coverage, and points where you can consider decreasing your coverage if you want to.
Agents are often taught that they should do annual reviews on what their clients have, but most of the time I think if you meet/talk with your agent every 2-3 years, that will work. You will need to contact them sooner if you have some life changes. Things like getting married, buying a home, having a baby, these are all times that increase your expenses so you don’t want to risk what you have by not have sufficient coverage in case the unthinkable happens. You need to consider the income of both spouses, multiply that anywhere from five to fifteen times depending on your liabilities and that will give you an idea of the amount of coverage you should consider. And if one spouse isn’t working, is the ‘stay at home’ partner, don’t assume you don’t need life insurance on them. If something happens to them, especially if you have kids, you may need to start paying for child care, need housekeeping help, and you aren’t necessarily going to be able to work as much. You may want to take time off for after school events. You may need to change jobs if you do something that makes you travel often. Just stave off a financial mess by insuring the non-working spouse, whatever your situation.
As you get older, those are times you may be able to either decrease your coverage, or elect to convert your term policy to a permanent policy, either a whole or universal life policy. If your kids are grown AND have left the nest (being grown doesn’t necessarily mean they’ve moved out on their own these days) you may be able to get by with less coverage. If your home is paid off or the mortgage balance is very low, something that current savings could pay off, you may be able to decrease your coverage.
But before you cancel or decrease coverage, evaluate the overall worth of your estate. One reason to maybe buy MORE at this point in life is to facilitate a transfer of wealth. Life insurance proceeds are tax free to the beneficiaries; some people spend a couple hundred thousand dollars to buy a million dollar policy, thereby increasing what they leave to their heirs. Also having life insurance paid to your beneficiaries can help them pay off the inheritance taxes a large estate can incur.
So for a little extra help in figuring out what you need, check out this life insurance calculator in addition to talking with an agent or financial advisor.
So, Happy Life Insurance Awareness Month–Be well!