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Have you recently reviewed your life insurance needs?

March 16, 2023
by Merline & Meacham, PA
Resources

Once upon a time, life insurance played a much larger part in an estate plan than it does now. Why? Families would use life insurance payouts to pay estate taxes. But with the federal gift and estate tax exemption at $12.92 million for 2023, far fewer families currently are affected by estate tax.

However, life insurance remains a powerful tool for providing for your loved ones in the event of your untimely death. The amount of life insurance that’s right for you depends on your personal circumstances, so it’s critical to review your life insurance needs regularly in light of changing circumstances.

Reasons to reevaluate 

Consider reevaluating your insurance coverage if you’re:

  • Getting married,
  • Getting divorced,
  • Having children,
  • Approaching retirement, or
  • Facing health issues.

The right amount of insurance depends on your family’s current and expected future income and expenses, as well as the amount of income your family would lose should you pass away.

The events listed above can change the equation, so it’s a good idea to revisit your life insurance needs as you reach these milestones. For example, if you get married and have kids, your current and future obligations are likely to increase significantly for expenses related to childcare, mortgage, car payments and college tuition.

As you get older, your expenses may go up or down, depending on your circumstances. For example, as your children become financially independent, they’ll no longer rely on you for financial support.

On the other hand, health care expenses for you and your spouse may increase. When you retire, you’ll no longer have a salary, but you may have new sources of income, such as retirement plans and Social Security. You may or may not have paid off your mortgage, student loans or other debts. And you may or may not have accumulated sufficient wealth to provide for your family.

Periodic reassessment a must

There are many factors that affect your need for life insurance, and these factors change over time. To make sure you’re not over- or underinsured, reassess your insurance needs periodically and especially when your life circumstances change. We can help you determine whether you have an adequate amount of life insurance coverage.

© 2023

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    This website is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of an attorney/client relationship.

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    • Our Firm
    • Practice Areas
      • Business Entities
      • Charitable Planning
      • Employee Benefits/ERISA
      • Estate and Gift Taxes
      • Estate Planning
      • Income Tax Law
      • Mergers and Acquisitions
      • Non-Profit/Tax Exempt
      • Probate/Estate Admin.
      • Tax Controversies
      • Wills and Trusts
    • Attorneys
      • Robert E. August
      • Jonathan R. Colao
      • Phillip J. Martin
      • Keith G. Meacham
      • W. Verne McGough, Jr.
      • Andrew D. Merline
      • David A. Merline, Jr.
      • Marie Monroe
      • J. Aaron Nelson, Jr.
      • Douglas B. O’Neal
      • David M. Thompson
    • Firm News
    • Resources