Changing jobs? Here's what you need to know about your life insurance coverage.

December 15, 2022

Are you ready to take the plunge and switch jobs? Perhaps you want to retire early and relax – or use your retirement time to start the business you've been dreaming about for years. While you're working out the details, don't forget to think about your life insurance coverage.

Why it matters

If your insurance comes from your employer, then it likely won't follow you into retirement and beyond. Many people may not realize that it's the same with their employer-sponsored life insurance. You'll want to learn as much as you can about your benefits – and how leaving your job could impact that – so you can be sure your family is still protected.

Think of it the same way you would rolling over your 401(k) or enrolling in a new health insurance plan. It's just one of the things you need to do when you're moving to the next phase of your life.

Keep in mind that it's important to think about your life insurance while you're still relatively healthy. Factors like your age and your overall health can make a big difference in your rates.

Exploring your options

The life insurance coverage you need to keep your family secure can vary. You need to think about your life stage, monthly budget, and life insurance coverage you might already have.

For example, someone in their 50s, who might be working, helping aging parents, or raising children and paying a mortgage probably needs more coverage than a retiring person in their late 60s or early 70s with a home that's already paid for and an empty nest.

The good news is that there are a variety of options on the market. You can get whole life policies, term life policies, and final expense life policies. Depending on your age, income, and other factors, it may be a good idea for you to have both whole life insurance and term life insurance.

Breaking down types of coverage

Whole life insurance is for "when" you pass away. You can have the policy for the rest of your life as long as you pay your premium. Because the value of your policy remains steady, the premiums are generally higher. But, they also gain cash value over time.

Final expense life insurance is a specific type of whole life insurance designed to pay out quickly to help your loved ones meet needs that might come up soon after you pass. It can help pay funeral costs, medical bills, and more. The premiums for this type of life insurance tend to be more affordable because they are for lower coverage amounts (like between $5,000 and $30,000). Final expense coverage also has age restrictions – it's typically for those between the ages of 50 and 80 years old.

Term life insurance policies are for "if" you pass away during a set period of time (usually between 10 and 30 years). They're designed to help your family during the time in your life when you have big financial obligations like mortgages and student loans or family obligations like aging parents or minor children.

Choosing the right life insurance is a deeply personal decision. You'll need to think through your obligations and your family situation to get a firm understanding of how much coverage you really need.

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