April 12, 2017 // All Resources // Personal Finance
If you have life insurance, it’s possible that you may have more than one policy—or need more than one. You may be asking if that’s really necessary. The answer is often, yes.
When you begin a new job, you are often so overwhelmed with the responsibilities of your new position that you don’t pay attention to the specific benefits you’ve been offered. But if you work full-time, you probably have life insurance through work: 59% of private employers offer this benefit and 98% of us enroll (great news!).1
Generally, this type of coverage is either a flat amount, say $50,000, or a multiple of your salary, such as one or two times your annual salary. This coverage generally ends when the job does, so it means you do not have old policies hanging around from previous jobs.
Life insurance through work is a nice benefit to have. But if you have a spouse or partner and children, or if you take care of a special needs sibling or aging parents, then you may also have the need for an individual life insurance policy. An individual policy is one that you own, and as long as you pay the required premiums, your coverage is in effect during the term of your policy (or lifelong, if you have permanent life insurance).
Over time, we may change jobs, earn more, add to our family, move to a larger home… All these life events mean that if something were to happen to us, it’s likely that we’d now need more money to replace the income that would be lost if we were to die prematurely and for our family to maintain their lifestyle in our absence.
Adding policies as you need them during the course of your life can be a smart answer to your growing need for coverage. You may be able to layer a few term policies to help ensure that all your financial responsibilities are covered over a period of time.
For example, the term policy that you got to cover your mortgage when you were in your 20s may be set to end when your mortgage does. But if you didn’t have kids until your 30s, then getting an additional term policy when your child is born may make sense to cover them through their college journey. The coverage for the mortgage might end, but your policy for your child’s future keeps going, until that’s no longer needed either.
This may sound complicated, but it doesn’t have to be. An insurance professional will work with you at no cost and do a life insurance needs analysis. They will help you figure out the best coverage amounts and types of policies to meet your short-, medium- and long-term needs.
1 "Benefits in the United States", Bureau of Labor Statistics, March, 2016
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