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That's Life - Insurance Plays a Key Role in Financial Planning

Published: September 25, 2020

That's Life - Insurance Plays a Key Role in Financial Planning

Today, life insurance is a key part of a solid financial plan.

You can use life insurance to leave much-needed income to your survivors, provide for your children’s education, pay off your mortgage, and simplify the transfer of assets. It can also be used to replace wealth lost due to the expenses and taxes that may follow your death, and to make gifts to charity at relatively little cost to you. There are two basic types of insurance: temporary and permanent, with many variations within each type.

Temporary (Term) Insurance

As a general rule, people purchase term-insurance policies to insure their families for a given period of time, usually no longer than 15 to 20 years. For instance, term insurance is often purchased by homeowners carrying a mortgage or by parents of young children. Term insurance is also called pure insurance—it consists of a death benefit only. It’s inexpensive compared to other types of life insurance products.

Permanent Insurance

If your insurance needs are longer than approximately 20 years, it’s usually more cost effective to use a “permanent” life insurance policy. Whole life and universal life are common types of permanent life insurance. These types of products contain an investment component, and can allow you to accumulate savings on a tax-deferred basis. Some allow you to borrow against any cash value you have built up in the policy.1

There are many different types of life insurance products to fit your own personal needs and situation. Check out the following resources to learn more. In addition, you may want to retain the services of a professional financial planner to help you determine your life insurance needs.

Typical life insurance considerations at different life stages:

Age 30

Factors to consider in the early years:

  • Young children
  • High debt
  • House mortgage
  • Loss of income would be devastating
  • Children’s education
Age 55

Factors to consider in the later years:

  • Children in college
  • Lower debt
  • Reverse mortgages
  • Retirement income needed
  • Simplify transfer of assets

Once in a Lifetime

Go to: lifehappens.org to access an interactive calculator that will help you determine a ballpark estimate of your life insurance needs. In addition, have your spouse or significant other perform the same exercise. 

Is it Time for Policy Review?

Life changes quickly; that’s why it’s important to periodically evaluate your financial and life insurance needs. If you answer “yes” to any of these questions, contact a Fellows Advisor about an insurance review today.

Schedule an Insurance Review

Life Insurance Learning Resources


1 Policy loans accrue interest and will reduce the death benefit. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding.

This material is for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

This material was prepared by LPL Financial, LLC. Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity. Securities and insurance offered through LPL or its affiliates are: Not Insured by FDIC/NCUA or Any Other Government Agency. Not Bank/Credit Union Guaranteed. Not Bank/Credit Union Deposits or Obligations. May Lose Value.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Wealthcare Advisory Partners a registered investment advisor. Wealthcare Advisory Partners and Fellows Financial Group, LLC are separate entities from LPL Financial. The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: CA, CO, DC, GA, FL, HI, IA, MD, MT, NC, OH, PA, VA, TX, WV. Personal and Commercial insurance services are offered through Fellows Insurance Group LLC. Fellows Insurance Group LLC is a separate entity from Fellows Financial Group LLC, LPL Financial and Wealthcare Advisory Partners. 

LPL Financial, Fellows Financial Group LLC, Fellows Insurance Group LLC and Wealthcare Advisory Partners do not offer tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. Investments are not NCUA insured. No credit union guarantee. Investments may lose value. Fellows Financial Group LLC, LPL Financial and Wealthcare Advisory Partners are third party partnerships and are not affiliated with United States Senate Federal Credit Union and USSFCU Best Life.

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