Over the years, our needs and priorities naturally shift as our lives evolve. When we are younger, we may be more carefree, with fewer responsibilities and a love for fast cars and smaller homes. As we grow, our families and responsibilities grow with us. This changes our perspective and we often trade in our fast cars for a more practical vehicle and move into a house that will become a home for our growing families. And as we become even more wise and experienced, we shift yet again as empty nesters with new interests and different priorities.
These changes are reflective of the natural stages of life — and just as our needs for cars and houses change with time, so do our needs for life insurance. When buying a new car or house we can easily count how many seats or bedrooms we need, but our needs are not always as clear when it comes to life insurance.
Getting the right amount of life insurance coverage is one of the most important decisions you can make, and seven times’ your annual salary is a guideline to consider. But this formula serves only as a base and should be paired with many other financial considerations.
Consider the following scenarios — which are just a few of many life stages that can impact your needs over time — and the amount of coverage that can fit into each situation.