“We bought our first life insurance policy right after we had our first child. The reality of being parents really hit home, and I kept thinking about all our new responsibilities. What if one of us dies? How will the other care for the baby, earn a living, pay the mortgage and all the other bills? I was looking at the numbers I’d scribbled down—the mortgage balance was HUGE—and suddenly life insurance seemed like a really good idea.”
Sound familiar?
Life insurance was a good idea when you bought it. If you bought it with us—we’re glad you did. We’re even gladder you haven’t had to use it. (That’s the thing about term life insurance: It’s one of the few things we buy that we hope never to have to use.) Now, five, 10, 15, or more years after you made that first decision, your insurance review is an opportunity to take fresh stock of the people, places, and things that matter most. Life evolves. And so should your insurance plan.
THINGS TO CONSIDER WHEN YOU REVIEW YOUR POLICY
1. CONSIDER YOUR NEEDS
Take an honest look at how your needs have changed since you bought your last policy. Is that mortgage as big a financial concern today as it was then? Maybe that child who motivated you to become an “insured person” has grown up, graduated, and sought insurance of their own? Possibly your practice has grown—and now it’s not your family who relies on you financially so much as it is your business partner?
Insurance is personal. For some, an insurance review uncovers increasingly complex needs that might include a growing business or a growing family. For others, it can be an opportunity to scale down. Our expert team of insurance advisors and financial planners can help uncover your needs and create a plan that’s right for you.
2. CONSIDER THE COSTS (INCLUDING OPPORTUNITY COSTS)
One thing’s certain: you’re older. Happy belated birthdays. And that usually means you’re more expensive to insure than you were all those years ago (even if “all those years ago” was last December).
As your coverage costs rise, it's essential to consider how they impact your budget and to evaluate the opportunity cost of allocating funds elsewhere. Term life insurance, by definition, will only cover you for so long. Permanent life insurance lasts forever—but you want to give yourself a long enough runway to enjoy all the benefits of a permanent plan. An insurance review is the ideal time to clarify whether you need the type of life insurance you rent or the type you own.
Here's what we mean:
Term life insurance is the type of insurance you rent. It can be a cost-effective way to get the coverage you need for as long as you need it. This type of life insurance makes sense for as long as you have financial obligations (a mortgage, a student line of credit) or for as long as there are people in your life who rely on your income.
Permanent life insurance, on the other hand, is the type of insurance you own. It represents a more significant upfront investment than term life insurance. And over time, your policy can become an asset that provides the same peace of mind as term life insurance while also helping you grow wealth—and eventually pass it on to your heirs.
Read more: What’s the difference between term life insurance and permanent life insurance?
A Lawyers Financial insurance advisor can help choose a strategy that meets your needs and considers every cost. If your needs are complex, your advisor can add to your bench strength by inviting a certified financial planner to join your team. And because we’re not-for-profit, their advice comes with a price tag that suits every budget: free.
3. CONSIDER LIVING BENEFITS
What about critical illness insurance, disability coverage, or business expense insurance?
Serious illness or disability can sideline you and your income for extended periods. For sole practitioners (and sole earners), it’s even more important to invest in living benefits than it is to invest in life insurance. (Financially speaking, there are few things worse than the sudden, unplanned end of your income). A lump sum, tax-free critical illness benefit can buy you the time and space you need to recover. Tax-free monthly disability benefits can provide you with reliable income all the way to retirement. And monthly business expense benefits can keep the lights on—and your staff paid—if an illness or disability forces you to take time away from your practice.
YOUR INSURANCE REVIEW: FIVE QUESTIONS TO ASK YOURSELF (AND YOUR ADVISOR)
- Do I have enough insurance to pay my current debts and ensure any commitments I’ve made (such as education plans for children or grandchildren) are secure?
- Should I renew my term life insurance or are the benefits of a permanent life policy while I’m alive a better fit for my current financial profile? Does it make sense to own both?
- What commitments have I made to my partners and my staff if I die before my planned retirement? What if I become sick, injured, or disabled?
- Does my estate plan cover higher capital gains tax rates introduced in 2024? Can life insurance also be a cost-effective solution for preserving more of my assets (and the cottage) for my heirs?
- Do I need critical illness or disability insurance? What are the financial implications for my dependents if I can’t work for a year or more?
Whatever your insurance needs, we can help.
Lawyers Financial insurance experts and financial planners have extensive experience working with lawyers, their families, and members of their teams to build custom-made strategies for every stage of life.
Connect with an advisor to review your insurance plan.
