The Importance of Life Insurance: Ages 31 to 49

Protecting your loved ones from the unexpected is an important part of a strong financial plan. Here’s why.

by NEA Member Benefits

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Many people think of financial planning primarily as a two-pronged strategy: managing current income and debts and then saving and investing for the future. But there’s another component to a comprehensive financial plan that’s often overlooked: protection. This is where life insurance comes in.

Your protection safety net

Life insurance can pay your bills, cover debts and protect those who rely on your income through the payment of a tax-free death benefit to your beneficiary. It’s a protection safety net that makes it easier to sleep at night, and this can be especially true for individuals in their 30s and 40s.

These prime earning decades are when many major life milestones happen, including growing families, upgrading homes and dealing with debt. Your financial plan is focused on accumulating assets and saving for retirement, and life insurance provides a relatively inexpensive way to make sure all your plans stay on track.

6 reasons mid-lifers need life insurance

You may want to include life insurance in your long-term financial plan even if just one of the scenarios below rings true. If you nod your head knowingly at more than one, a life insurance discussion should be on the table for sure.

1. You have a family. Even if your spouse works, chances are good that your married lifestyle relies on your combined incomes. If your income gets taken out of the equation, will your spouse be able to keep the family in their home and maintain the dreams you have for your children all the way through college and beyond?

2. Your employer coverage could be volatile. Educators change jobs a lot. Group coverage through your District may not be portable and may have too low a face value to cover your needs. Self-insuring by purchasing individual coverage puts you in control of your protection plan.

3. You have aging parents. According to a 2015 Pew Research Center study on how Americans are coping with aging parents, a little less than a third of adults are providing some form of financial assistance to aging parents. Unless your parents have long term care insurance or substantial savings, it’s possible you might have to help out financially at some point. This can be stressful even in the best of times, but if only one spouse is left with the burden, the stress and guilt levels may go up.

4. You have a mortgage and other large debts. A home is the largest debt most people ever carry. A life insurance benefit can keep loved ones in a home by paying off the mortgage and provide the long-term security of a paid off real estate asset. Other debts such as business and personal loans, cars or outstanding home improvement costs could be paid off with life insurance proceeds, greatly simplifying ongoing financial responsibilities for your loved ones.

5. You don’t have a special savings account for funeral expenses. The National Funeral Directors Association pegs the median cost of a funeral at just over $7,000. But most experts advise budgeting $10,000 to cover other expenses such as travel and family gatherings. You could set aside a special savings account for this or simply include the expense in your life insurance benefit calculations.

6. You want to lock in lower premiums. Life insurance premiums go up as you get older or if you have health problems like high blood pressure or diabetes. Locking in rates in your 30s and 40s while you’re healthy makes it easier to plan for the future.

Affordable life insurance options

Group Term Life. This type of policy provides a stated benefit upon the death of the policy owner. The policy does not provide any returns beyond the stated benefit amount.

Coverage from $25,000 to $500,000 is available. Premiums are based upon the age of enrollment and increases in 5 year age bands, and you may adjust coverage during the life of the policy. Once coverage is issued, you cannot lose coverage due to health reasons and coverage remains in force up to age 80, although benefits begin to decline at age 70. Discounts are available for non-smokers. There are no set term limits and medical underwriting may be required.

Term Life Insurance is best suited for those who know for certain their need for life insurance coverage will be temporary—that they will have accumulated enough liquid assets to self-insure the funds/protection needed, or that surviving family members will no longer have a need for the extra protection life insurance provides.

Level Term Life. A fixed benefit amount is provided for a fixed period of time for a fixed premium amount. Coverage is available for up to $1,000,000, and 10, 15 and 20 year terms are available. Full coverage (no benefit reductions) will remain in place up to age 80.

The younger the age at which you purchase coverage, the lower the rate will remain for the duration of coverage. Premiums will not increase due to your age and benefits will not decrease for the entire term. Medical underwriting is required. A discount for non-smokers is available.

Level Term Life Insurance is best suited for those in good health who have a fixed time period or need for protection, such as putting children through school or paying off a mortgage. A new Level Term policy may be purchased at the end of the initial policy, but you must reapply and the premium is based upon your current age.

The bottom line

Ask yourself a simple question: Would someone I love suffer financially if I died? If the answer is yes, it’s time to start shopping for life insurance quotes. Check NEA’s affordable coverage and get quotes to find the coverage and rates that fit your financial plan.

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