Life walks into a bar and meets insurance

BY ANDREW STEWART

We have all heard our fair share of bar jokes. Some of them warrant a chuckle, some a groan. They are corny and I believe every father should have some in his repertoire to embarrass his children. A couple of my favorites:

A mushroom walks into a bar and orders a drink, but the bartender yells at him to get out before he stinks up the place. The mushroom looks taken aback and says, “Why? I’m a fun guy.”

The past, present, and future walk into a bar. It was tense.

So, life walks into a bar and meets insurance…As we travel through the journey of life, our financial needs and obligations undergo constant change. Life milestones that usually change our financial obligations and trigger a change are events such as graduating university or college. Getting married and purchasing your first home. Taking that next big step and starting a family. Finally overcoming that fear of starting your own business. Mid-life and children finally move out and finally you move into retirement. It should come as no surprise that insurance varies in importance at different milestones of life. Proper planning at each stage is necessary to ensure that you and your dependents are protected.

Here are some of the insurance needs to consider as you move through different stages of your life.

Young and single and entering the working world – ages 19-29
As a young adult, you become more independent and self-sufficient and no longer rely on your parents for your financial well-being. While your death would be tragic many advisors would argue that it would not devastate anybody financially and life insurance is not a priority. I disagree with this notion because I have seen far too many parents go into financial hardship due to a child dying at a young age. No parent saves and plans for this to happen and life insurance would relieve that burden. It is quite possible you had someone co-sign for your apartment and you have debt such as credit cards and auto loans to pay off. You may also wish to lock in your insurability while you are young and healthy. Life insurance premiums are based on age and health so get it while it will be the cheapest in your life. If you are disabled long term and unable to make an income, disability insurance is a how you would transfer this risk to an insurance company. Either through your group plan at work or an individual disability insurance policy.

Married with children and becoming established – ages 30-49
The most popular trigger for insurance is when someone else is financially dependent on you. Financial obligations are growing, and long-term financial goals are becoming better defined. These events may trigger the need for change to your insurance policies. Life is not static, and your policies should not be either. Key expenses to cover include:

• The full balance of a mortgage or auto payment
• Regular living costs to maintain your family’s current lifestyle
• Funding a stay-at-home parent/partner who relies on your income
• Children’s expenses, from daycare to college costs
• Medical bills or any final expenses

Once you have reached this stage, all your policies should be in place. The only thing left for you to do is to monitor them once every few years, or when a major life event occurs, such as a promotion or the death of a family member. If you did purchase insurance when you were young. You may want to review your insurance coverages to make sure they are adequate.

As you move into retirement and solidify your financial future – Ages 50-65
There is some relief as your children have become independent, your mortgage is smaller or completely paid off and with most of your major financial obligations behind you, your financial choices can now better reflect both your values and your wishes. It may be important for you to leave a legacy for your children. If you have grown your savings and net worth enough, you may be able to satisfy this wish. If not, life insurance is the best tax-efficient way. Now is also the time to investigate long-term care insurance. Most of us will enter retirement with a good understanding of our current health and what it takes to manage it. But, as time goes on, everyone’s health changes, and we gradually begin to spend more on our medical, physical, and personal care needs.

As you can see, our insurance needs are constantly changing throughout our lives, put your house in order and revisit regularly.