Life Insurance Planning

Financial planning is an integral step to attaining peace of mind. Life insurance plays a vital role in your financial plan, but your coverage needs can change dramatically depending on where you are in your personal or professional journey. There are various life events and stages that may affect your life insurance needs. It’s important to consider these stages to understand how life insurance planning plays a role in your financial plan.

Life Insurance Planning Stages

Read through the following real-life scenarios to better understand some of the common life events and financial changes that might prompt you to revisit and adjust your life insurance coverage. Whether it’s a new addition to the family, a change in marital status, or a shift in your career or financial responsibilities, these examples can help you recognize when it’s time to make sure your policy still meets your evolving needs.

Planning a Family?

Just a heads up: the financial responsibility arrives even before the baby does. You need life insurance, whether you’re trying to get pregnant, currently are pregnant or a new parent. Life insurance will be the single most important purchase you make to secure your child’s financial future.

Raising Children

The cost to raise one child from birth to age 18 is now over $240,000. This doesn’t even cover college. Are you prepared for these huge expenses? What if something happens to you? How will your family survive? Life insurance will help you protect your children’s financial future.

Just Married

Married couples share everything, right? This partnership means you depend on each other both emotionally and financially. You both need a financial plan that includes life insurance. Make sure that both of you have enough life insurance to cover the loss of your individual financial contributions if one of you were to die unexpectedly.

Even if you or your spouse becomes a stay-at-home parent, life insurance should be a major part of your financial plans.

New Home

So, you’ve finally bought your own home. It’s a big step and a big financial responsibility. Do you have a plan to cover the cost of the mortgage if something were to happen to you or your spouse? If you died today, would your surviving spouse or family members have the means to cover the cost of your mortgage or even pay it off completely? What about other expenses like maintenance, utilities, unexpected repairs and property taxes? A well-thought-out life insurance plan would allow them to keep the house you bought together.

The Debt Factor

When your life is running on credit, it increases the need for life insurance. You need a life insurance policy that will cover outstanding balances, especially if a loved one is a co-responsible party on a loan, credit card, etc. When you’re creating your debt management plan, make life insurance a part of it.

Promoted

Finally got that promotion you’ve been hoping for? Congratulations. Keep in mind, when your income increases, so does your need for life insurance. Why? Because when you have more money coming in, you tend to spend more. Additional life insurance coverage will allow your family to maintain their new standard of living. Remember, experts suggest having a life insurance policy that is 10 to 20 times your annual salary.

Caring for Aging Parents

It’s your turn to take care of your aging parents. There’s a good chance that they’ll live into their mid-80s. Will they be able to take care of themselves financially or will they need you to chip in? Think about what would happen if you died prematurely. Healthcare, housing or long-term care – make sure these expenses are calculated into the total face value of your life insurance policy.

Business Changes

Yes, life insurance can take care of your business, too. That’s why it is important to reevaluate your life insurance policy every time your business goes through a phase of change (becoming more profitable, acquiring more debt, hiring employees at key positions, etc.).

Changes in Marital Status

In the unfortunate event of the death of your spouse or a divorce, it’s a good idea to take a fresh look at your coverage. You may not need as much coverage anymore. But if you have kids, remember, their financial security is still a top priority. If you remarry, you may need to change your beneficiary information and update your policy to accommodate the financial needs of your new spouse.

Planning for College

These days the cost of a college degree is staggering. Your kids’ education will help them stand on their own feet. Make sure your life insurance plan is adequate to cover the cost of housing, tuition, books, etc., even if you’re not around to see them go to college.

Retiring in Peace

Plan well (and early) for your retirement and you greatly improve the likelihood that you’ll live in peace when your working days are over. Life insurance should play a significant role in your retirement plan. The right policy will provide for your loved ones who may not be able to live comfortably on your retirement savings alone.

How Much Life Insurance Do You Need?

To determine how much would be enough, calculate your predicted expenses and your family’s future needs. Life insurance should be viewed as the replacement of your income when you’re gone. How long will loved ones rely on your income? The younger your children, the more income your family would need to replace if you passed away. Consider going one step further: we suggest talking with one of our life insurance experts to analyze your needs more thoroughly. Call (800) 442-9899 to get started.

Life Insurance Planning: FAQs

What is life insurance planning?

Life insurance planning is the process of analyzing your financial needs, family responsibilities, and long-term goals to determine the right type and amount of coverage. The goal is to ensure your loved ones are financially protected if something happens to you.

Why is life insurance planning important?

Without proper planning, your family may struggle to cover:

Loss of income
Mortgage or rent
Childcare and education costs
Final expenses
Outstanding debts

Life insurance planning ensures they’re protected from financial hardship.

How do I determine how much life insurance I need?

A good rule of thumb is 10–15 times your annual income, plus coverage for debts, household expenses, and future needs. A detailed needs analysis considers:

Income replacement
Mortgage or rent
Education costs
Retirement needs for a surviving spouse
Final expenses

AccuQuote can help calculate a personalized coverage amount.

What type of life insurance is best for planning purposes?

It depends on your goals:

Term Life – Best for temporary needs like income replacement, mortgages, or raising children.
Permanent Life (Whole, UL, IUL) – Best for long-term wealth planning, estate planning, or building cash value.

Many families use a combination of both.

How often should I review my life insurance plan?

Review your life insurance every 1–2 years or after major life changes such as:

Marriage or divorce
Birth or adoption
Buying a home
Starting a business
Retirement
Significant increase in income

Life changes often require updated coverage.

Should both spouses have life insurance?

Yes — even if one spouse isn’t earning income. Non-working spouses often support the household with childcare, transportation, and daily responsibilities. Replacing these services has real financial value and should be insured.

How does life insurance fit into retirement planning?

Permanent life insurance can help with:

Tax-deferred cash value accumulation
Supplemental retirement income
Protecting a surviving spouse’s income
Covering final expenses
Enhancing legacy planning

Some policies can also help reduce taxes or provide living benefits in retirement.

What if I already have life insurance through my employer?

Employer-provided life insurance is helpful but often:

Only covers 1–2 times your salary
Ends when you leave your job
Doesn’t allow custom planning

A personal policy ensures continuous and adequate coverage.

How does life insurance planning support estate planning?

Life insurance can:

Provide immediate liquidity for estate taxes
Protect family assets and property
Create inheritance for children or heirs
Fund buy-sell agreements for businesses
Equalize estates among multiple heirs

It’s essential for preserving wealth and legacy.

What’s the difference between needs-based and budget-based planning?

Needs-based planning: Calculates the ideal coverage amount for your family’s financial needs.
Budget-based planning: Focuses on finding the best policy within your monthly budget.

Most people use a blend of both approaches.

Does life insurance help with college planning?

Yes. Life insurance can:

Provide tax-advantaged cash value for education expenses
Secure funds for college even if a parent passes away
Protect a child’s financial future regardless of circumstances

Permanent life insurance is often used as a supplemental education planning tool.

Can I adjust my coverage as my needs change?

Yes. Many life insurance policies — especially Universal Life and IUL — offer flexible premiums and adjustable death benefits. Even term policies can sometimes be converted or layered with additional coverage.

How do I start the life insurance planning process?

Start by evaluating:

Your current financial situation
Your family’s future expenses
Your long-term goals

Then compare policy types, gather quotes, and work with a licensed advisor to build a strategy. AccuQuote can help create a tailored plan based on your needs and budget.