Sometimes we don’t think about our life insurance needs until it’s too late. Changing circumstances, rises or falls in income and whether or not the kids are still at home all affect the amount of coverage we need. Fox & Hare financial adviser Glen Hare explains why we need to adapt our life insurance cover for all life stages.
Just starting out : Kicking off a career and saving money for your life goals
So you’ve left school, completed a degree and started out in your career. You might not be thinking about life insurance at this stage of your life, but getting on the ladder is something you definitely need to consider.
As you’re starting out, you might be thinking more about saving for a home, getting some savings under your belt and enjoying life. But a basic life insurance cover will see you on the way to preparing for the rest of your life.
When you’re starting out with life insurance, you need to think about the premiums you might want to pay. Stepped premiums can be more popular for young people, as they start out low and increase year on year. But you will need to think ahead and make sure you can cater for those rising premiums as you get older. The last thing you want is to pay for a policy for 10 or 15 years, then have to cancel it and end up needing a benefit you don’t have in place.
Level premiums can change over time but the increase isn’t affected by one’s age as stepped premiums are, but the upfront cost is higher and are often much more expensive than the stepped equivalent when you first take out cover. Level premiums may increase, but you pay a more consistent amount year on year.
The prime years
You’ve got a home (and probably a mortgage), as well as kids and all the costs that come with them, including school and medical fees. When you consider your coverage at this stage of your life, it’s likely that the bare minimum you will aim to cover is the debt on your primary residence. The last thing you want is to leave your family without a roof over their heads.
But you should consider other outgoings – school fees, car payments and so on. And if you’re the primary wage earner and your partner is the primary carer, you may want enough coverage so the children can be looked after until they’re old enough to fend for themselves.
Summary: The bare minimum you want is to cover the debt on your primary residence. But you will also want to consider the outgoings – school fees, car payments and so on.
The golden years
The kids have left home, your house is paid off and you may have investments or be considering retirement. It’s at this stage that you might think about dialling back your coverage, as long as your partner is taken care of in the event something happens to you.
In the golden years, including retirement, you may have enough income to live off and for your partner to survive on. But you should check your income and investments carefully to ensure there’s going to be enough for someone to cover their expenses and have a healthy lifestyle.
Changing life events call for changing insurance cover
Life insurance changes as we get older and go through different life stages. It always pays to talk to a financial adviser about your current life stage – and the coverage you may need.
Find out more about life insurance with MetLife