Having both a will and life insurance are two ways you can be prepared for the worst-case scenario of premature death. It’d be nice if setting up these important tools once was enough to protect your family for life, but it isn’t.
Instead, you need to regularly reexamine these tools and how they impact your family. If you’re going through a major life change, chances are you should take a look at both tools in detail to make sure they’re still providing the protection you need.
Why having life insurance is important
Having life insurance is one of the best gifts you can give your family. It gives your family peace of mind that they’ll be financially covered if the absolute worst-case scenario becomes reality.
Without life insurance, many families would struggle to continue living their normal lifestyle. If the breadwinner in a household dies, the family will experience a drastic reduction in income. This can destroy even some of the most financially stable households if they don’t have adequate life insurance.
Thankfully, getting life insurance isn’t a difficult process.
Getting life insurance
One of the easiest ways to get life insurance is through Policygenius. What makes Policygenius great is you can compare prices from multiple insurers with one quick application. You don’t have to fill out many applications to find the best-priced policy for you.
After you fill out some basic details about yourself and your family health history, you can select how much coverage you want and how long you want it to last. After you do so, you’re usually presented with initial quotes from several life insurance companies. Then, you can move forward with purchasing a policy for the insurer of your choice.
Once you have adequate life insurance coverage, your family won’t have to worry about how they’ll survive financially after you pass away. Instead, they can focus on recovering mentally without the stress of not having enough money when they need it most.
Why having a will is important
Having a will may not be a priority for many growing families, but it should be. In most cases, there’s no written and legally enforceable way of knowing what you’d want to be done with your assets if you pass away without a will. Instead, the courts will decide how your assets are divided.
This may not seem like a big deal initially, but it can make dealing with your death more complicated than it needs to be for already grieving family members. It can also cause fights within the family after your death if you had mentioned specific wishes but they were never put in a will. You can avoid these issues by documenting your wishes in a will.
If you have children, having a will is even more important. A will allows you to name a guardian for your children in case something happens to you. Without this, your family members may fight over who will be the guardian after your death which can make matters even more stressful.
Getting a will
In some cases, your life may be more complicated and having a trust may be a better option instead of a will. Thankfully, Trust & Will makes figuring out which one is best for you a fairly easy process.
When you visit Trust & Will’s getting started page, you can select from the following six items:
- I have kids under 18
- I want to specify my health care wishes
- I own a home or business
- I have more than $100k in assets
- I’m married
- I want to leave gifts to people or charity
Based on the options you choose, it will tell you if a will, trust or a nomination of guardian form would be best for you. For instance, if you check I have kids under 18, I’m married and I want to leave gifts to people or charity, the website suggests creating a will.
Do you need life insurance, a will, or both?
On the surface, figuring out whether you need life insurance, a will, or both can seem complicated. Thankfully, it’s a pretty straightforward process to figure out the answer for most families.
Get life insurance if you have a family
Figuring out if you need life insurance comes down to a simple question. If you died today, would your family be able to continue living the life they were before you died for an extended time (think years or decades) and not be financially stressed? If not, chances are you need life insurance.
If you’re single with no dependents, you may not need life insurance. You could get it now to lock in low rates for being young and healthy, but no one would need money if you passed away today.
That said, those in relationships or with dependents have others that rely on them. In these cases, getting life insurance is usually a smart move. This is one of the reasons it makes sense to reevaluate your needs whenever you have major life changes.
Policygenius states a good rule of thumb: You need life insurance coverage that’s equal to 10 to 12 times your income.
If you already have a significant amount of assets your family could use, this number may be a bit smaller. On the other hand, families with virtually no money in reserve may need this much or more.
Another rule of thumb: get a will if you have a family
Figuring out if you need a will isn’t too difficult either. As mentioned above, Trust and Will offers an easy way to determine if you need a will, a trust or a nomination of guardian form. Visit this page and select your choices to find out which is best for you.
For instance, if you select I have more than $100k in assets, I have kids under 18 and I’m married, the website suggests starting a trust. It also makes sense to reevaluate this decision during major life changes.
It’s easy to see how the answers to the six possibilities on the Trust & Will questionnaire could change in a couple of years.
Don’t forget that it’s always a good idea to meet with a financial professional that can take a look at your whole financial situation to make sure you have enough coverage for both your life insurance and trust or will needs. As is true with all of life, sometimes rules of thumb won’t apply to your particular family circumstances. In these cases, customized advice could put you in a better position.
Life insurance and wills aren’t ‘set it and forget it’ items
Life insurance isn’t something you take out then forget about until the policy expires. Instead, you should reexamine your life insurance needs regularly.
If you have additional children or your income increases drastically, you may need more life insurance to cover your family’s needs. On the other hand, you may be able to decrease the amount of life insurance in some cases, too. If you build a significant amount of assets that would completely provide for your family even if you passed away tomorrow, you may no longer need life insurance.
A will isn’t a document that you write once and are done with forever, either. You should reexamine your will on a regular basis. In particular, make sure you reexamine and update your will when you have major life changes such as marriage, divorce or having a child. You may want to update beneficiaries or guardian designations.
Now that you understand the basics of determining how much life insurance you need and whether you might need a will, let’s take a look at some specific circumstances that could impact these decisions.
Major life changes mean you should reassess your life insurance and will.
Here’s more about what you need to know about each.
Life insurance and wills when you’re getting married
Getting married is a joyous time in life, but it also comes with increased responsibility. Now, you should care for both you and your spouse, not just yourself. This includes making sure your spouse could financially handle themselves if you died tomorrow and vice versa.
Take a good look at your new combined financial picture to determine how much life insurance you and your spouse each need. Consider any new obligations that would need to be paid off after coming together as a couple as well as any new income brought into the family.
Once you have an idea of how much life insurance would be necessary to cover your new needs, get quotes from Policygenius to start the process.
Life insurance isn’t the only consideration though, and you will likely need a will as well.
Here’s why: when you get married, there’s a good chance how you want your assets to be distributed upon your death may have changed. Maybe your siblings or parents no longer need your assets and you want your new spouse to have everything when you pass away. You’ll also need to deal with how new marital assets will be dealt with.
In this case, make sure you either put a will in place stating this or you update your old will with your new preferences. If you don’t, a previous will could leave your assets to others or the court may have to decide who gets your assets upon your death.
Get started on your will by visiting Trust & Will.
Having a baby – life insurance and wills & what to consider
Having a baby makes life more complicated in many ways. Two major considerations you’ll need to quickly work through are how much life insurance you need and how to update your will.
First, having a baby is expensive. Raising a child through adulthood and putting them through college, if you decide to, can easily cost hundreds of thousands of dollars. If you died tomorrow, your spouse would be left to foot that bill alone without your income. For this reason, it typically makes sense to buy more life insurance to cover these new expenses just in case you pass away before your child is fully grown.
When you have a child, you may once again decide to change how you want to leave your assets in your will. While your spouse will likely still be the primary beneficiary of your estate, you may want to add your child as a secondary beneficiary.
More importantly, you’ll want to state who you want your child’s guardian to be should you both unexpectedly pass away. Without this important information in your will or nomination of guardian form, the courts may decide who to appoint as guardian.
Special cases for life insurance and wills – surrogacy or adoption
You may not grow your family in the traditional sense. Instead, you may opt to have a surrogate carry your child, be a surrogate for someone else, or decide to adopt a child. In these cases, having a will and life insurance is still super important.
You’re adding a new family member or helping another family do the same. These events still result in many of the same changes. They may add more expenses requiring more life insurance. It’s also important in these cases to have a legal document stating who should be the guardian of the child in the worst-case scenario.
Divorce, life insurance, and wills
People don’t normally go into a marriage planning for a divorce, but it does happen. Depending on your family situation, a divorce can be financially devastating. If children are involved, things can get even more complicated and expensive.
Depending on your particular situation, you’ll need to reexamine your life insurance coverage. You’ll still want your children to have enough money to live a normal life even if you pass away after you get divorced. The amount you need may be higher or lower than before you got divorced. Either way, reexamining your decision to find an answer is important.
Reexamining your coverage amount isn’t the only task to complete with your life insurance. You’ll also want to quickly update the beneficiary of your policy. If your policy previously would have gone to your now ex-spouse, you’ll want to make sure you change that to the appropriate party after your divorce.
Updating your will is extremely important after a divorce, too. If your previous will left everything to your now ex-spouse, you may want to update your beneficiaries to your children or another family member, instead.
Kids leaving the nest
When your kids leave the nest, your life might go through a major financial change. Your expenses could decrease drastically. If you’ve diligently saved and invested over your lifetime, you may even be able to retire early. Take a look at your finances to see if you still need life insurance. You may be financially independent and no longer need your policy.
At the same time, kids can be even more expensive when they move out. If you help them pay for college, your finances might be even tighter than usual. If you still have many obligations that would need to be covered after you pass away, you may need even more life insurance than you already have.
It doesn’t hurt to reexamine your will at this point in your life, either. Maybe you helped pay for one child’s education but the other got a full-ride scholarship. As such, you decided the child with the full-ride scholarship should get a bigger part of your estate when you pass away. This needs to be updated in your will. Otherwise, it won’t happen unless your children get along well and agree to honor your wishes even though they weren’t documented.
How much time does it take to get life insurance or a will?
If you don’t already have life insurance or a will, it doesn’t take a crazy amount of time to get these important things in place. Even if you already have them, it’s easy to do a quick review to make sure everything is in order.
I know – dealing with life insurance and a will is not something you want to think about at a joyous time. When you get married or have a baby, you want to focus on the good that’s happening at the moment.
However, it’s even more important at these moments to make sure your family is covered in case the worst happens and you pass away. The last thing you’ll want your new family to deal with is a financial struggle.
Making sure you have the proper amount of life insurance and making sure your final wishes are known through creating or updating a will has to become a top priority.
Definitely make the time; I promise you it’s worth it.
If you’re going through any of the above major life changes or other life changes, you should take a couple of minutes to reexamine your needs and priorities around both life insurance and wills.
Make sure the life insurance you currently have is enough. If it isn’t, get quotes from Policygenius in only a few minutes.
Similarly, revisit your will to make sure it still covers everything you need at this point in your life. Visit Trust & Will to fill out the quick six-question questionnaire and get started with a will, trust, or nomination of guardian form. You’ll have access to a great legal team and won’t have to be guessing the answers to the many questions that always come up when doing wills and trusts.
The bottom line – reexamining these important tools only takes a few minutes. By doing so, you’ll make sure your family is covered in case the worst happens.
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- Trust & Will Review