We all understand the importance of insurance—whether it’s homeowners, auto, health, or life insurance. But did you know that your coverage needs to change as you move through different stages of life? The type and amount of insurance you need evolves with your circumstances. Here’s a helpful guide to navigate those decisions and safeguard against life’s inevitable risks and uncertainties.
Many students are still eligible for health and auto insurance through their parents’ plans and they don’t typically have dependents or property. This may lead you to think that students don’t need to be part of the insurance conversation, but there is one type of policy that could make a difference to your finances: a hospitalization policy. Hospitalization policies cover unexpected medical costs students accrue from surgery or hospitalization, essentially shielding them and their parents from going into debt to pay for medical expenses.
The most important types of insurance that those in this stage of life should consider include health, renters, auto, and disability insurance. Most likely your employer will provide health insurance for you, but if they don’t, it is important to research your options to find the best rates available. Renters insurance is very affordable and often required by landlords. It will help protect you in the case of stolen or destroyed property (think jewelry, laptops, or other big-ticket items). And when it comes to auto insurance, it is important to shop around and find the most competitive coverage.
Finally, for this stage of life, it’s wise to consider disability insurance—or critical illness and income replacement coverage—as part of your financial plan. This type of insurance provides a safety net by replacing a portion of your wages if an accident or illness prevents you from working. Your greatest asset during this time is your future earning potential, and disability insurance plays a vital role in shielding it, offering financial peace and stability when you need it most.
As a newly married couple with a house, it’s time to turn your attention to life, homeowners, and liability insurance. The last thing you want to do is get married, buy a new home with your spouse, and unexpectedly pass away. In this extreme case, you would be leaving your spouse with the responsibility for paying off the entire mortgage with one income. If you have life insurance for yourself, you could alleviate such a risk.
Speaking of your home, homeowner insurance policies vary in what they cover, so it is important to make sure you understand the terms. Weigh the pros and cons of purchasing a more expensive policy that will pay for the full cost of rebuilding your home and for replacing your possessions versus a policy that just pays for your home’s market value.
Finally, you should also consider liability insurance, also known as umbrella coverage, which essentially will protect you beyond what homeowners and auto insurance covers. Because your net worth is likely growing, this type of insurance is important.
The most critical types of insurance to have at this stage include life insurance and health insurance for your children, as well as disability insurance. In the bustle of adding a child to your family, it’s easy to forget about paperwork and logistical details, so make a note to add your new little one to your existing medical policy within a month of their birth so you don’t run into any coverage issues.
If you don’t already have a life insurance policy, now is the time to get one. If you do have a policy, be sure to boost your coverage to include the future cost of raising a child, college costs, and maybe even coverage for a stay-at-home parent. Either way, make sure that your children and spouse are taken care of should anything happen to you.
Another type of policy to revisit is disability insurance. Now that you are providing for children, possibly paying off a mortgage, and reworking your budget to include childcare or a reduced income for a stay-at-home parent, your income needs to be guaranteed. Make sure that you cover the risk of not being able to work due to an injury, accident, or unforeseen complication.
This is a pivotal life stage where making decisions for the future comes into play. You may still need many of the above-mentioned policies, but you should also look into long-term care insurance. This type of insurance covers the future costs of long-term care, which may include in-home care or the costs of living at a nursing home to assist with the basic personal tasks of everyday life. There could come a time when you cannot take care of yourself independently, and you don’t want to drain your savings to get the care you need. There are different types of policies, including traditional LTC policies or hybrid LTC policies, so do some research to find the best choice for your situation.
Once you retire, your insurance priorities change. For the most part, you will not need to protect your ability to earn income since you are no longer working. However, as you get older, insurance can significantly lessen the impact of medical expenses and long-term care costs.
When you officially retire and lose your employee healthcare coverage, you will either have to reassess or obtain new coverage on the following: health insurance, Medigap, Medicare prescription drug plans, and long-term care insurance. If you retire early, you may need an additional short-term health insurance policy since Medicare does not kick in until you reach age 65. It is also important to consider Medigap policies since Medicare will most likely not cover all of your medical expense needs. Also, because Medicare Part A and Part B do not cover most prescription drugs, you will need to shop around for Medicare Prescription Drug Plans (Part D). Finally, as discussed in an earlier stage, it is important to consider LTC insurance. The longer you wait, the more expensive this type of coverage will be.
And remember to take the time to review all of your in-force policies to make sure you aren’t over-insured, and update beneficiaries of your life insurance policy as needed.
As life evolves, so do insurance needs. At Wealth Advocate Group, we know how overwhelming insurance decisions can feel, and we’re here to help you navigate those changes. Our team is ready to guide you in selecting the right policies and coverage tailored to your unique situation and current stage of life.
If you’re ready to explore how we can support your goals, reach out to us at Contact@Wadvocate.com or 440-505-5578 to schedule an introductory consultation. We’d love the opportunity to connect and assist you!
Lauren Coverdale joined Wealth Advocate Group in 2019 as an intern. Upon completion of her undergraduate degree, she joined the team as a paraplanner. As a paraplanner, Lauren provides analysis of client investments, estate planning, cash flow, and retirement readiness for her team. Lauren graduated from John Carroll University in 2020 with a Bachelor of Science in Business Administration in Finance with a concentration in Wealth Management and Financial Planning as well as a minor in Entrepreneurship. In 2021, Lauren also obtained her MBA from John Carroll University. Lauren received her CFP® designation in 2023. She also holds her Series 7 license through LPL Financial and 66 securities licenses through LPL Financial and Stratos Wealth Partners. In her spare time, she enjoys being outdoors, traveling, and spending time with her husband and their dog, Indi. To learn more about Lauren, connect with her on LinkedIn.
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