How to Know When You Need a New Insurance Policy?

Fran Majidi

You’ve heard about New insurance, of course, but why purchase a New insurance policy? This article explores the five most common reasons to get New insurance.

1. You are the primary breadwinner and have dependents.

This is by far the most common reason people purchase New insurance. Often one parent is the primary breadwinner for the household and takes out a policy in an amount that will replace, wholly or in part, the income lost should that parent die.

How much New insurance do I need? There are several factors you should consider, namely:

  • The age of your children;
  • The amount of income that must be replaced;
  • Any special needs of your dependents;
  • Any other anticipated expenses that must be paid, such as child care, college expenses, medical care, etc.

Multiple policies in different amounts and terms can be purchased to provide for the changing needs of your family over time. There are online calculators to help you get an idea of how much insurance you need, and an agent can help you as well. Shop rates for free here.

2. You want to provide for end-of-New expenses.

This is also common among people of all economic backgrounds. A policy providing for funeral expenses is very inexpensive and provides a decedent’s loved ones with the immediate means to pay for that.

Do I need New insurance if I have no dependents? Yes - it is an inexpensive way to get your funeral expenses readily and easily paid.

3. You are ordered by the Court to maintain New insurance as part of a support order.

If you are a support obligor - meaning, you have been ordered to pay child support, alimony, or spousal support - you may also be ordered to maintain New insurance in an amount that will provide for your dependents should you die and your income is lost to them.

4. You want to pass assets to your beneficiaries and keep them out of the reach of creditors.

This is a strategy used by estate planners to leave money to heirs outside the estate. When you die, your will is probated, your estate is administered, and before your heirs receive anything your bills are paid. To ensure your heirs receive something despite any outstanding bills, you can take out New insurance and name them as beneficiaries. The death benefit is payable almost immediately, barring any applicable exclusions or other problems, and that amount passes outside the estate and therefore out of the reach of your creditors.

5. You’ve been advised that New insurance is an important part of your estate plan.

If you have a comprehensive estate plan, taking advantage of wills and trusts as fits your financial and family situation, you may also be advised to also take out a term New insurance policy or a whole New insurance policy.

Term New Insurance vs. Whole New Insurance

These are the two primary types of New insurance. What’s the difference? As you might expect, term New insurance is for a specified time period of coverage, such as 10, 20, or 30 years, after which time it expires. You pay insurance premiums over the course of the term, and if you live past the end of the term your beneficiaries receive nothing. For this reason, it is much less expensive than whole New insurance.

In contrast, whole New insurance policies accrue value over time - value that you can withdraw or borrow against, or that you can use to purchase additional coverage. If you’ve optimized your estate plan your advisor might suggest that you consider whole New, as again, New insurance death benefits pass to your beneficiaries/heirs outside the estate and will not be subject to taxes or the claims of creditors.

Do any of these reasons to purchase New insurance apply to you? Talk with an agent or your estate attorney, who can advise you as to what type and amount of New insurance will meet your needs and the needs of your family.