Major life events that can affect your life insurance

There are many life events that impact your finances and affect your life insurance needs. Some of these milestones are relatively small—like getting a salary increase or moving to a more expensive city. Others mark significant life-changing events—like becoming a parent or losing a loved one. The important thing to be aware of is that proper financial protection can help you weather life’s storms. So, make sure you recognize the small and large life events and shift your financial planning (and insurance coverage) accordingly. Here are eight major life events that can have a significant impact on your life insurance needs.

1. Getting married

As you and your partner plan a future together, it’s important to set financial goals that will allow you to have the lifestyle you desire. Getting married is a life-changing event for insurance needs. If you and your partner plan to share one salary, you should make sure that income is protected. If one of you has debt, the outstanding amount should be reflected in your life insurance coverage. Every marriage has a unique financial situation, so your life insurance policies should be tailored to the specific needs of you and your spouse.

Getting divorced or losing your partner is another life-changing event for insurance needs. A divorce will mean separating your finances from those of your spouse and determining which changes you need to make in your life insurance coverage. Loss of a partner will mean accessing the partner’s life insurance benefit and determining what life insurance coverage you will need going forward. This is especially important if you have children, and it is also important if you have a home with a mortgage.

2. Having children

If you decide to have children, they will depend on you for their entire young lives—for housing, food, clothing, education, healthcare, and thousands of other things. And you’ll want to be able to provide those things for them, no matter what may happen in the future.

While your employer may offer life insurance as part of your benefits, if you leave that job or if it’s not enough to cover the necessary expenses your growing family needs, you must replace or supplement it. The ability to provide for your child is directly tied to your financial situation, and having adequate life insurance can protect the ability of you or your spouse to cover necessary expenses should something happen to either one of you.

3. Paying for college

As your children approach college age, the financial burden can increase significantly. Many families often take out loans to finance their child’s college education. If you or your spouse pass away unexpectedly, life insurance can provide a safety net to cover those debts and other college costs, ensuring that your child’s education remains uninterrupted.

While life insurance can help your family cover expenses in a worst-case scenario, there are also living benefits you can utilize to help pay for college. Whole life insurance provides cash value that you will be able to access to help pay for your child’s college education.¹ This can be useful because while funds from a 529 college savings plan can cover many costs associate with college, not all necessary expenses may qualify. While you may still be able to use funds from a 529 college savings plan to help pay for these unqualified expenses, if you do you will have to pay federal income tax on the withdrawals as well as a 10% IRS penalty fee.² The cash value from a whole life insurance policy, on the other hand, can be used to pay for virtually anything without incurring a fee, giving you more freedom to help your child financially. Additionally, you can use the cash value without risking a reduction in the amount of financial aid for which your child may be eligible.

4. Starting a business

Entrepreneurship comes with its own set of risks and rewards. Starting a business often involves taking on significant financial risks, such as business loans and lines of credit. If something should happen to you, life insurance can provide funds to cover outstanding debts and ensure that creditors are paid off. Additionally, it can help ensure that your family will be taken care of by covering essential expenses such as mortgage payments, utility bills, and education costs. If you have business partners, it’s important to make sure they’re protected as well, so your business will continue to run smoothly should something happen to them.

If you have employees, offering life insurance and disability coverage as part of a benefits package can help you attract top talent and improve employee retention. If you plan on growing your business, these highly sought-after benefits can play a key role in helping you do so.

5. Buying a home

Becoming a homeowner is a common goal for many people. Purchasing real estate is almost always done via a mortgage—a substantial debt that could take decades to pay off. A mortgage on a home is considered “good debt,” since it’s an investment in your future, but it’s still a financial burden. You need to make sure that you or your spouse will be able to continue to pay the mortgage should something happen to one of you. Purchasing or updating life insurance when you experience the life event of becoming a homeowner is always a good idea because adequate life insurance coverage means that your family can remain in their home should the unexpected occur. New York Life offers a variety of life insurance options that can complement your existing life insurance coverage.

6. Caring for aging parents

It’s not uncommon for children to provide financial support to their parents in their senior years. Life insurance can give you peace of mind knowing that if something should happen to you, they will have the financial support they need to continue living comfortably.

7. Having grandchildren

While it may seem a long time away, one day you may have grandchildren of your own. When that time comes, you may want to give them the kind of gift that can last a lifetime. Whether it’s helping to fund their future education or providing a life insurance policy for your grandchild that can help them as they get older, life insurance can be a much appreciated legacy you leave behind.

8. Retiring

Transitioning out of work and into retirement marks another life milestone. If you’ve saved for retirement during your working years, you’ll now begin the process of turning your savings into accessible income. If you have whole life insurance, the transition will be easier. Your life insurance policy can provide a legacy for your loved ones, so you’ll feel less need to watch every penny. Or if needed, you can access some of your policy’s cash value to supplement your income during years when the market is down.¹ New York Life and its subsidiaries also offer income annuity products that can be used to create ongoing, reliable income that lasts for the rest of your life.³

When you go through a major life event, speak with a New York Life financial professional about how your life insurance will be affected. With your agent’s help, you can create a strategy that fits your specific needs.

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¹Accessing cash value reduces the death benefit and available cash surrender value.
²“Qualified Expenses You Can Pay for With a 529 Plan,” Emma Kerr and Sarah Wood, March 1, 2024. USNews.com.
³Guarantees are based upon the claims paying ability of the issuer.