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  • Writer's pictureInfinity Advisor

Insurance Planning That Fits Your Life

You buy insurance to replace something you may lose, like income upon a loved one’s death or property as a result of an accident. Basically, the more you have to lose, the more reason you have to shift your financial risk to an insurance company. You may wonder how much coverage is right for you, but successfully managing risk isn’t just about the amount of insurance you carry. It’s also about choosing the right kind of insurance to fit your personal circumstances.

Consider these tips as you face insurance decisions throughout the important stages of your life:

You're just starting out.

If you’re young and single, with no dependents, and living on your own, these insurance policies may make the most sense:

  • Health - Enroll in your employer’s healthcare plan, if offered, or purchase a policy yourself. The Affordable Care Act of 2010 enables people seeking health insurance to search offerings and enroll online. Excessive medical costs can be incurred at any age, so it’s important to minimize that risk by being insured. If you pay for your own plan, think about creating a personal budget to help manage healthcare costs.

  • Auto - If you drive a car and you’re no longer eligible to stay on your parent’s auto policy, you must seek out this coverage. Today, it’s easy to get auto insurance quotes online and compare your options.

  • Renter's - If you rent an apartment or condominium, it’s a good idea to protect your personal property with this insurance. Your assets are usually more modest during this phase of your life, and renter’s coverage is often very affordable.

You tied the knot.

Once the marriage certificate is signed and the honeymoon is over, you may want to evaluate some additional insurance options:

  • Life – When you’re single without children, life insurance isn’t a priority because no one is financially dependent on you. But, that can change when you get married. Life insurance protects you and your spouse from personal hardship in the event of premature death. Many people start with group life insurance through an employer. You can also consider other types of individual life insurance that stay with you even if your employment ends:

  • Term Life – generally offers the most affordable rates and the most protection per premium dollar. Term policies guarantee a death benefit for a fixed period of time (the term), and most have increasing premiums as you get older or near the end of the term.

  • Whole Life – provides permanent protection for your entire life. Premiums typically remain fixed and are higher than other life policies because the death benefit is guaranteed for life. Some policies accumulate cash value at a fairly low guaranteed interest rate.

  • Universal Life – is a flexible variation of whole life insurance in that the premiums and death benefit amounts are adjustable according to your changing needs. Cash value builds at interest rates set by the insurer, and they are guaranteed not to fall below a minimum rate.

  • Variable Life – combines the features of whole life with the ability to invest in stock and bond funds held in the company’s separate account. Cash values and death benefit amounts can fluctuate because of the account’s exposure to market conditions.

  • Homeowner’s – If your married life includes a new home, this type of insurance is required in case an accident or event causes you to lose all or any part of the home and its contents. You can usually choose deductible and coverage amounts that fit your budget.

Your family is growing.

With the addition of your first child, or any future children for that matter, it’s wise to take a fresh look at your coverages:

  • Health - Add children to your health plan as soon as possible, to be sure they’re covered within your enrollment period.

  • Disability - Replacing your income becomes more important as the number of people who depend on it increases. Disability insurance replaces a portion of your income if you suffer a qualifying disability. This kind of insurance may be offered by employers, and generally, group rates are more affordable than individual rates. Instead of disability insurance, some people prefer to build an emergency fund for use in the event of disability.

  • Life - Now is the time to consider increasing your life insurance coverage to be prepared for the mounting costs of raising children. If one parent leaves a job to care for the children, you’ll need to calculate those costs, as well.

  • Legal - Some employers offer plans that cover legal fees associated with some common legal services. This can be valuable because insurance planning may intertwine with legal matters, like creating a trust for life insurance proceeds paid to minors or setting up guardianship arrangements.

  • Business - If you own a business, you know how closely it can be tied to your family’s security. That’s why it’s important to consider how insurance, like key person policies, fit into your business succession strategies.

You're approaching your golden years.

Whether you’re counting down to retirement or already living it, you have unique concerns when it comes to insurance:

  • Long-Term Care - After your children are grown, but before you retire, you may want to consider this kind of insurance. It helps pay for professional medical care in your home or at a facility, if you or your spouse face a long-term illness. The planning you do in your fifties can provide a meaningful benefit later in life when your budget tightens..

  • Health - You may need to consider supplemental medical insurance to cover costs that Medicare does not. There are many insurance providers that offer this coverage, and your advisor can help you determine what’s right for your situation.

  • Life - You likely need little to no life insurance at this phase of your life. Still, you may have existing policies that can play a role in your overall estate plan.

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