Life Insurance: Determining How Long You May Need It

Many people who buy life insurance policies think they will need coverage their entire lives, but it’s a little-known secret that you may not need life insurance forever. How do you determine how long you will need life insurance?

First, ask yourself why you are buying life insurance in the first place, then determine how long those circumstances will exist.

As an example, let’s say you’re buying life insurance to protect your children in the event of your early demise. In that case, you will not need the life insurance forever; you will only need it until your children are out in the world supporting themselves and no longer in need of your financial assistance. So you may want a policy that is in effect until your youngest child reaches age 22. If your children are aged three and five, you would want to consider a policy with about a 20-year term.

Another example: You are buying life insurance to protect your spouse in the event of your early demise. So you would want the policy to cover your lost income until the year that you would normally retire, after which your spouse would be covered by Social Security and retirement savings. If you are 55 now, then you would only need a 10-year policy.

Keep in mind that these are only general guidelines. You may want to use life insurance to provide “bonus” income to a child or spouse or to address complex estate planning issues. When considering life insurance, as is the case with any financial instrument, it is best to get assistance.

If you think you need a life insurance policy or you need to review your existing policy, we can help you determine which financial instruments meet your individual financial circumstances and goals. Call or email us for more information.