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You Bought Life Insurance for a Reason – Is it Still the Right One?

By: Dustin A. Husarik, CFP®
Executive Vice President – Financial Advisor
Magnan Family Wealth Management

 
Life insurance is one of those financial tools we often “set and forget.” You might have purchased it years ago – when you got married, had your first child, or took out a mortgage. At the time, it made perfect sense. You wanted to protect your loved ones in case something happened to you. But how often do you revisit that decision?

Just like other parts of your plan, life insurance deserves a fresh look from time to time. Your life, goals, and responsibilities change – so it’s worth asking, is your life insurance still aligned with your needs today?


What Was the Original Goal?

Start by remembering why you bought your policy in the first place. Was it to replace your income if something happened to you? To cover debts or provide for a child’s education? Maybe it was to lock in a low premium while you were young and healthy.

Now ask yourself: Is that still the goal?

If your children are grown, your mortgage is nearly paid off, or you’ve built up significant savings and investments, the original reason for your policy may no longer apply – or it might need to shift towards something else.

Life Changes, So Should Your Coverage

As your life evolves, the role life insurance plays should evolve with it. Here’s how different stages and personal circumstances can affect the kind of coverage you need, and what types of policies might make the most sense:

Young Families: Income Protection is Key

When you’re raising children or just starting out with a mortgage, the biggest concern is often protecting your family’s financial stability if something happens to you. In this stage, term life insurance is usually the most cost-effective option.

  • Why it works: It provides a high level of coverage at a low cost for a set period (e.g. 20 or 30 years), which aligns with your highest-need years – when your children are dependent, and debts are high.
  • What to consider: Make sure your death benefit is enough to replace your income, pay off major debts, and provide for childcare or education costs.


Mid-Career Professionals: Protection Meets Planning

As your income grows and your financial life becomes more complex, you might start thinking beyond basic protection. You might want coverage that can serve multiple roles – like wealth building or future liquidity.

  • Policy Options: A blend of term and permanent insurance be effective here. Permanent policies like Universal Life offer lifelong coverage plus cash accumulation.
  • Why it matters: Permanent policies can provide living benefits – such as borrowing against the cash value or supplementing retirement income down the line.


Empty Nesters: Shift Toward Legacy and Liquidity

Once the kids are grown and the mortgage is under control, your priorities might change. You may be less concerned about income replacement and more interested in leaving a legacy, helping cover estate taxes, or creating liquidity for heirs.

  • Policy Options: At this stage, permanent insurance may be a good solution. You get all the benefits above such as borrowing against the cash value or supplementing retirement income while also having a death benefit that can transfer tax-free to your heirs. Another good policy may be survivorship life insurance which insures two people (typically spouses) and pays the death benefit only after both have passed. This policy is often used in estate planning to provide liquidity to heirs, especially for those with estate tax exposure or complex assets (family businesses or real estate).
  • Planning Tip: Theses policies may be especially valuable if you have illiquid assets and want to help ensure heirs won’t be forced to sell them to pay taxes or expenses.


Retirees: Simplify or Strategize

If you’re already retired, the need for traditional life insurance may be lower – but not gone. Life insurance can still be a powerful tool for:

  • Long Term Care Expenses
  • Covering Final Expenses
  • Offsetting taxes on retirement accounts passed to heirs
  • Policy Options: Repurposing existing permanent policies to those that have Long Term Care Benefits or the potential to grow at a better rate of return for estate or charitable planning (e.g. Moving Whole Life to Variable Universal Life). If you have a policy with cash value, exploring a 1035 exchange into a more suitable product could provide answers to current and future needs

Life insurance isn’t just a one-time decision – it’s part of a living, breathing holistic plan. Its purpose should evolve as your life does. By reviewing your policies regularly with Brian or myself, you can ensure that your coverage reflects your current goals, not just your past priorities.

If it’s been a while since you last evaluated your life insurance, now might be the perfect time to take another look.

 
*Insurance products are offered through nonbank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.

*Wells Fargo Advisors Financial Network does not provide legal or tax advice.  We encourage you to speak to your chosen tax advisor regarding your specific situation. Any discussion of taxes represents general information and is not intended to be, nor should it be construed to be, legal or tax advice. Tax laws or regulations are subject to change at any time and can have a substantial impact on an actual client situation.