Regardless of the stage of life, buying coverage to insure it is part of sound financial planning, say experts in the field.
Being insured throughout life’s stages is important because it guarantees that the person’s financial obligations will be covered upon death, said Matthew Anderson, an agent with First International Insurance in Grand Forks.
“It is something that should be in everyone’s financial plans – not just for you, but for people who will take over your debt." Anderson said. “If you have any form of debt, that will transfer to a loved one or to next of kin, in some cases.”
That’s why he and some other insurance advisers suggest college graduates who have loan debt are among the people who should consider buying life insurance.
“You don’t want anyone being responsible for your student loan debt,” said Diana Hoverson, Country Financial representative in Grand Forks. The cost of life insurance is not prohibitive, she said.
“It’s never going to be less expensive than when you're young,” Hoverson said.
Besides student loan debt, other reasons single people should consider buying life insurance are having a mortgage, consigned loans and family members who rely on you, said Brian DeVillers, Farmers Union Insurance agent in Grand Forks. Coverage also should be considered if an individual owns a business, has partners in a business and to have peace of mind knowing that end-of-life expenses will be covered, DeVillers said.
Other times life insurance is important: When buying a home, upon marriage or divorce, the birth of a child, a job change and legacy planning. Meanwhile, the “living benefit” – when people are accumulating money to supplement future income needs during retirement – is important, too, Hoverson said.
Having life insurance coverage through a person’s employment is not a reason to forgo having a personal policy, she said. That’s because life insurance that's tied to a job will end when an individual leaves or is terminated from that job.
“It’s always important to own your own contract that you can take with you,” she said.
While financial advisers believe life insurance coverage is important throughout all the stages, the type and amount of coverage will vary from individual to individual, they say. For example, a person in their 20s with children and a mortgage will have different life insurance needs than a person in their 30s with no debt, Anderson noted.
“Every situation is going to be different,” he said.
Options for life insurance coverage include term, whole life and universal life.
“It really depends on their goals – what that person wants," said Steve Walker, Gate City Insurance Agency vice president, senior insurance consultant.
Term, as the name implies, is coverage for a certain period of time.
“Essentially, you're renting the term,” Walker said, noting that 10, 20 and 30 years are typical term insurance time periods.
Once that period ends, the coverage will expire. Term insurance doesn’t have guarantee of future insurability unless the policy has a “rider” that allows conversion to lifelong insurance, Anderson said.
“That conversion rider is a big one I push,” he said. Adding the rider to the term insurance policy guarantees the person won’t be denied future life insurance coverage based on a health issue.
While term insurance, without the conversion, expires in a certain period of time, whole and universal life insurance policies give permanent coverage and have a cash value.
Grandparents often use their cash from their life insurance policies to gift their grandchildren, Hoverson noted.
Life insurance customers should continue to talk to their advisers once they have an insurance policy because insurance needs change as life circumstances change, said Adam Silewski, Gate City Insurance Agency adviser.
“You always want to keep up. Visit with your adviser,” he said.
Because the types of life insurance policies people should buy and the amount of coverage they need differ from person to person, talking to an insurance adviser is important.
“Everybody’s needs are totally different,” Hoverson said.