Life Insurance

One of the most important things you can do to protect your family is to purchase as much life insurance as possible and start as early in your career as possible. 

I was given two pieces of advice many years ago which have served me well. 

The first came from my father. He advised me to never expect the company you work for to support your family in the event you die unexpectedly. Hence, the need to accumulate enough life insurance coverage to support your family if you cease to exist.

The second was offered by my grandmother, who was a long-time agent with New York Life Insurance Company. She advised me to buy Term Life insurance as early in my career as possible and to maintain a practice of regularly assessing my life insurance coverage at key milestones in my life so that the benefit to my family would be sufficient to pay off all of our household debts and provide 10 times the amount of my annual gross income to my family. 

As a young person on a budget, you can buy “Term” insurance very reasonably. Then gradually, as your finances allow, you can convert the Term policies to other types of insurance such as “Whole Life”. The main difference between Term and Whole Life insurance policies is that Whole Life builds up a “Cash Value” over the life of the policy. As the cash value of the Whole Life policy builds, it can be used to fund future expenses such as your children’s education, if circumstances require. However, if you can leave the cash value alone and allow it to build up, it can be a help to you and your family as you move into retirement.

Try to develop a plan when assessing your life insurance needs. For me, I bought a new policy each time I passed a life “milestone”. I bought my first life insurance policy shortly after graduating from college. Then I bought another one when I got married. After that milestone, I bought another policy when we built our first home. When each of our three children were born, I bought another policy.

The last policy I bought was when I turned 49 years old, as I was advised it is tougher to purchase a policy beginning at age 50—as a person begins to encounter age-related conditions such as heart disease, hypertension, high cholesterol, etc. For me, I was lucky to have received this advice from my father and grandmother so many years ago since, at age 52, an application for one last policy was denied as I was found to have elevated cholesterol and hypertension. Fortunately, by age 52, I had accumulated and kept paying the premiums for enough life insurance to insure my family’s future.

Remember—buy life insurance early, and establish a plan to increase the amount of life insurance coverage you have over the years to “insure” your family’s financial future. 

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