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- I thought I wouldn’t need life insurance until I made a lot of money or became a parent.
- Talking to a financial advisor helped me realize that I probably shouldn’t wait to purchase my own policy.
- My household depends on my salary and a permanent policy could complement my retirement plan.
Ever since I turned 30 and got married, people in my life have recommended that I get a life insurance policy. Friends, family and financial advisors have spoken to me about it over the past four years – and I’ve ignored their advice.
For a while I thought I wouldn’t need life insurance until I had a kid, made a certain amount of money (I was thinking half a million dollars a year) or have major expenses other than rent and credit card bills. But lately, as my husband and I take stock of our finances and start thinking about having kids, I’ve been wondering if now would be a good time to get a life insurance policy.
That’s why I met Certified Financial Planner Kelly Crane. I shared my financial portfolio and current life plans to see what he thought: Should I get a life insurance plan in 2023?
Crane immediately said yes.
Life insurance would cover my household dues
My husband and I both work full time. We use both of our incomes to support our lifestyle, pay our bills, and try to achieve our individual and shared financial goals. Crane says that if I died, having a life insurance plan would help cover projected future income for my husband and future children.
“When looking for a policy, I would recommend buying enough to replace income for life, but most importantly have enough for the next 20 years or so while the future child is still dependent” , he told me.
Plus, he says that not only could life insurance cover the household contributions I’m helping pay now — like rent and bills — but once we have kids, the plan could help cover the costs of new family responsibilities, such as childcare, extracurricular expenses, and college funding.
A permanent policy could add to my retirement plan
One thing I mentioned to Crane is that I feel behind on saving for retirement, since I only started contributing regularly to my SEP IRA just a few years ago.
It was then that he mentioned that life insurance can be a relatively inexpensive supplemental retirement plan. “You can consider a combination of term and permanent insurance, where the permanent has an investment element that could serve as a retirement plan,” says Crane.
Indeed, with a permanent life insurance policy, the cash value of this account increases over time and can be withdrawn as a source of income in retirement. “Life insurance cash value accumulation is tax-exempt or tax-deferred, depending on how withdrawals are made,” Crane says. “You could accumulate tax-sheltered retirement funds in the account.”
Permanent life insurance policies are known to have higher premiums than term ones, so be sure to consider your full portfolio and goals – and consider getting help from a financial advisor. – before registering.
After looking at my portfolio, Crane says buying life insurance is a very smart thing to do at this point in my life, not just because of my fluctuating income and future plans to have a child. , but also because of my lack of retirement funds. However, he recommends getting a policy before you get pregnant or after having a child, as rates can be significantly higher if you try to purchase life insurance while pregnant.
Ultimately, he says getting a policy is a great way to support my family.