Major life transitions often create new financial risks that require updating the protection strategies that you have in place. One way to help mitigate risk is through insurance. It’s not just a product to purchase, it’s a dynamic part of a comprehensive financial plan.
Reviewing coverage during key milestones can help protect your loved ones, assets, and long-term financial goals. Life is constantly evolving, and your risk management strategy should evolve with it. We make a point of reviewing our investments on a regular basis, but many of us will overlook insurance until there's a problem. The best time to evaluate coverage is before a life-changing event creates unintended gaps.
What are some of those important life-changing events? We outline some of them for you below.
Marriage and Starting a Family
When getting ready to tie the knot, or when expecting your first bundle of joy, it’s important to review the protections you have in place. Reviewing existing life insurance and disability coverage to protect income due to death, illness, or injury should be done well in advance of these major life events.
Your income, and your ability to earn it, is your most valuable asset. Understand what levels of coverage are appropriate for your situation. Also, many people aren’t fully aware of the coverage provided through their employer’s group life and disability programs.
An often overlooked yet very important item to review are the beneficiaries on your life insurance and retirement accounts. This is especially true for a second marriage. You want to be sure that those are updated appropriately to protect your current spouse.
Don't overlook the value of a stay-at-home spouse. Insurance can help cover the cost of childcare, household management, and transportation if something were to happen to that spouse.
Buying a Home
When moving into a new home, your insurance agent will probably give you an adequate level of coverage. But over time, your home increases in value, especially if you’ve put on an addition, and those increases should be factored into your level of homeowners insurance.
You may also want to consider some umbrella liability insurance, especially if you have a dog, a pool, or young drivers living in your home.
Career Changes or Business Ownership
When leaving your job, it’s important to understand changes to employer-sponsored benefits. Will there be differences in coverage at your new employer? If you are leaving an employer to open your own business, be sure to obtain coverage with your own life and disability policies to replace the coverage you’ll lose.
Approaching Retirement
As you get closer to retirement, life insurance and disability coverage may not be as important to you as it was earlier in your career. Life insurance can still be used to leave an inheritance for your family, so it’s important to assess those needs before cancelling any existing policies. Overall, your focus will tend to shift toward medical coverage via Medicare and long-term care coverage. These will play an important role in your long-term financial planning.
Closing Takeaway
Life transitions are natural checkpoints for reviewing financial protection. Regular reviews of your current coverage, or one prompted by a major life event, can help ensure your risk management strategy remains aligned with your changing goals. The goal isn't simply to own insurance, it's to have the right protection based on the needs of you and your family.
Apella Capital, LLC (“Apella”), DBA Apella Wealth, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Apella Wealth provides this communication as a matter of general information. Any data or statistics quoted are from sources believed to be reliable but cannot be guaranteed or warranted.