Finding feasible ways to cover the living expenses of your loved ones after your death is a real challenge. This is especially true for people who have mortgages to consider as well as college tuition for their children. Fortunately, many people are able to provide greater levels of financial security for their families by layering their life insurance plans. While having a single policy is often better than having no coverage at all, strategically layering plans could be the ideal way to cover all major expenses.
How Life Insurance Layering Works
Layering life insurance is a lot like diversifying your investment portfolio. It will provide you with more options to fall back on when necessary and it will ultimately cover more bills. One very simple plan for layering policies is to purchase a whole life cover that will provide for medical and after death expenses and supply family members with ample funds for living, college tuition and any other costs that are incurred.
This plan is then layered by a term policy that matches the duration of the policyholder’s home mortgage loan. This way, if the policyholder should pass away before the mortgage is paid off, the costs of maintaining mortgage payments will be covered by the secondary term life insurance plan. Strategies likes these are often far more cost-effective than binding one whole life plan that is sufficient for all after-death expenses.
Adjusting Coverage To Reflect Changes
Consumers are often encouraged to treat their life insurance plans like investment portfolios, think long-term investment and not short term loan. These protections should be re-balanced periodically in order to account for financial and lifestyle changes as well as for any other developments that impact the short and long-term needs of the policyholder. There are many different forms of life insurance including whole, term, universal and variable and some of these options might prove better suited to a specific situation than others.
As families expand and new financial obligations are obtained, the protection plan will also need to be altered. Adding new layers of coverage is one way to improve upon the available coverage without making radical alterations to the existing protection. More importantly, conducting routine reviews of existing plans can expose costly gaps in protection. These reviews also give consumers the opportunity to learn more about new product developments, market conditions that might impact coverage benefits and funding patterns.
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A Common Example Of Layered Life Insurance
One simple strategy for layering life insurance products includes a term policy for assisting children with college tuition and a permanent universal policy that will provide adequate financial assistance to a spouse after the policyholder’s passing.
This larger and long-term coverage can even help to diversify the retirement savings of the policyholder and his or her spouse. Ultimately, techniques like these can be essential for obtaining the total peace of mind that people are striving for when binding life insurance.
Rather than merely gaining assurance in one area of after-death expenses, consumers can know that their loved ones will not experience any dramatic declines in life quality in any area. Children can obtain higher education, spouses can retain their homes and all other living expenses can be covered. Best of all, with a diverse range of plans to chose from, many consumers are able to employ strategies that help to bolster their post-retirement security.
Don’t put it off
The reality of life insurance is that it is inextricably tied to the one inevitable event that most people spend the majority of their lives dreading: death. After having spent time building and fostering a successful career, however, this is one of the most important exit plans to consider. Choosing to lock into a good plan now is actually going to bolster you ability to get additional coverage in the future. Although you might plan on spending your years single, college debt, mortgage debt and burial expenses will have to be managed by someone after your death. These are not debts that you want to pass on to your family members.
Why you should buy early no matter your income
You will never be any younger than you are today. The costs of this type of coverage increase with every year that you age. The condition of your health will have an obvious impact on your life insurance rates and odds are, your health is not going to improve at a consistent rate the older that you become. This, at least, is how most life insurance companies view it. They know that the mere passage of time is going to have a marked impact on the health-related risks of insuring you. Thus, even though you might drop a few pounds or alter a few life habits over the years, these things will probably not have as dramatic of an impact on your life insurance costs as your age will.
No matter what your goals are today, things can change. Getting coverage while it is still easy and affordable to do, will make it far easier for you to add to or layer this coverage should you ever decide to start a family, take on new expenses or assume the care of an aging family member. These are all responsibilities that make life insurance essential.
Many people who are deemed not insurable right now, would have had a much easier time securing coverage if they had only bound their life insurance policies earlier in life. Certain health conditions that often develop in between early adulthood and the time that people typically start thinking about life insurance can make it far more difficult to bind a decent and affordable plan later on. It is also important to note that there are many life insurance policies that allow policyholders to borrow against them. These funds could be used to start a business or finance the purchase of a new home or automobile. Ultimately, life insurance will give you options.