If you were asked the purpose of life insurance, I believe everyone’s immediate response would include taking care of loved ones. We want our families to be able to pay off debts like student loans or mortgages, or provide additional funds if you are a caregiver of young kids or aging parents.
If you use this narrower view of life insurance, then you may think that you no longer need it once larger debts are paid off and kids are grown. You have it all covered by this stage of life!
I had a similar mentality during a recent annual check-up. Going into the appointment, I quickly assessed my health: I eat fairly well, take my vitamins, and I run multiple times a week (yes, I am one of those people who genuinely enjoy running). I figured I am knocking it out of the park health-wise!
As I was relaying all my stellar habits to my doctor, instead of immediately congratulating me on my good work, he asked what I was doing for strength and resistance training. Even though I was checking the box for the recommended 150 minutes of exercising a week, I had a major hole in my exercise regime that may have lasting impacts on my health further down the line. Strength and resistance training is key – especially for women – to improve muscle mass, balance, and coordination with the goal of reducing bone density risks later in life. I thought I was checking the box with my current routine, but it took another person looking at the whole picture to pinpoint a need I was completely missing!
So while you may have “outgrown” life insurance in the traditional sense, there are other ways that it can be leveraged to protect your loved ones. A couple common uses include:
- Income Replacement: If you are still in your earning years, the death benefit proceeds from life insurance could be invested to spin off income for your surviving spouse/family members to replace any lost earnings.
- Creating a Legacy: Life insurance proceeds could be specifically earmarked for children/grandchildren/charitable organizations so that you are in control of what you leave behind as an inheritance or your legacy.
- Estate Tax Mitigation or Advanced Estate Planning Funding: We often leverage life insurance to fund advanced-design trusts or strategies in the estate planning space.
- Business Planning: Business owners often use life insurance to fund buy-sell agreements with other partners. Life insurance policies can also be assigned for loans so that you do not have to put any other assets up as collateral.
Life insurance can be leveraged in many ways that are outside the box of traditional uses. Our team would be happy to review your current insurance program and help you identify any areas that may be useful in your overall planning!
The World is Your Oyster