Appropriate life insurance coverage is one of the cornerstones of an effective financial and estate plan. Having sufficient life insurance protection can mean financial security for your loved ones, an orderly transition for you business or professional practice and needed liquidity for you estate. but any factors come into play when determining the "proper level" of life insurance coverage. and, periodically, events will occur that should prompt a review of one's life insurance needs. Here are some of the most common events suggesting the need for such a review.
When you marry, you normally take on additional financial responsibilities. Even though your need for life insurance might not grow dramatically on you wedding day, that need is likely to increase over time. For example, When you first marry, both you and your spouse may be working, and, if you get used to a certain standard of living, you will probably want to make sure your spouse will be financially prepared to continue at that level is anything should happen to you.
Bringing a child into you life means making many changes. Commitment to raising a child generally means a commitment to more life insurance, too. You will assuredly want to be able to support your child until he or she graduates from high school or college, and perhaps beyond. If something should happen to you, where will the funds for education expenses come from? Life insurance can fill that need. And, if you have more that one child, that need will be even greater.
When you negotiate a loan for the purchase of a home, most lenders will require that you insure the home against any accident or natural disaster that might occur. Of course, the worst possible disaster would be your death. If you do not have adequate life insurance at the time of your death, your family might not be able to afford to stay in you home. That would mean a double loss for them - your loss and the loss of the family home.
You probably hope to leave most of your assets to your loved ones at your death, but certain costs may be incurred because of your death, or an illness leading to your death, and those costs may claim a significant portion of your assets. Also, your estate may be subject to federal and/or state estate taxes. Life insurance proceeds could reduce the burden on you asset and help to further protect you heirs. If you purchase life insurance to cover you potential estate taxes, you will probably want to structure that purchase so the insurance proceeds will not be included in your estate for estate-tax purposes.
Amendments to the tax law may also affect your life insurance planning - especially the estate tax. And, since no one can be sure what Congress will do about the estate tax in the long run, you should be vigilant in regard to the effects of the estate-tax law on life insurance needs.
All in all, the, the amount of life insurance you need will depend on many aspects of you personal and business situations. We an help you reevaluate you needs as time passes and circumstances change. Feel free to give us a call.