This can be an overwhelming time in life. Amid all of the emotional turmoil, considerations still must be made for your new financial situation. Separation or divorce is tough enough without having to worry about the possible disruption to your finances. One of the things you need to reconsider is your life insurance. If you have children, you need to ensure that their financial future is protected, and that they are properly cared for in the event that something should happen to you.
Why is life insurance important when you are newly single?
When a partnership ends, you most likely experience a dramatic shift in your financial situation, where living on two incomes turns into living on one. You may become primary caretaker of the children, or you may now become responsible for paying child support or alimony. Life insurance helps make sure that in either event, your responsibilities are met. It can be your legacy that helps you continue their college education funds or pay for the mortgage that provides a stable roof over their heads. You can also set up a trust that the children can benefit from when they grow up.
What type of life insurance should I get?
This is a great way to protect your family for a specific amount of time. This type of insurance pays a guaranteed benefit in the event of the insured’s death during a specified term. Typical term lengths could be 10, 20, or 30 years. It comes with an end date, but it is also the more affordable option and the easiest to understand. You might purchase term life insurance to help supplement your income until retirement, until your kids are grown, or to make sure the mortgage gets paid in full.
Learn about Term Life Insurance
This lasts you for the rest of your life, unlike term insurance. While it can be more expensive, it has several attractive advantages. This type of insurance comes with fixed premiums, meaning your monthly payment is locked in and will not increase as you age. Your policy will also build cash value over time that you can borrow against tax-free to help you fund your retirement, for instance, or your child’s college fund. Consumers appreciate the benefit of forced savings, as well. And as long as you’re paying the premium, you’re covered if you die tomorrow or you live to be a hundred and twenty.
Learn about Permanent Life Insurance
This is often considered to be the best of both worlds. This type of life insurance gives you the opportunity to have life insurance coverage and also save money for the future. It builds cash value over time much like permanent life insurance does, and you can take out a policy loan if needed. The premiums are flexible, meaning you can change the existing policy to make it more affordable while keeping it in force and continuing to build cash value. And as long as you’re paying the premium, you’re covered for the remainder of your life.
Learn about Universal Life Insurance
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