One of the most common questions that arises when families start using their cash value life insurance policy is: “How do I know when it’s time to start another policy?”

Every person and every family has a unique situation and there is never a one-size-fits-all approach to how this question gets answered. But I’ll lay out just 4 considerations that you can keep in mind when this question inevitably comes up as the years go by:

  1. Increased Income
  2. Uninsured spouse
  3. Windfalls
  4. Funds earmarked for a specific purpose

Consideration #1: Increased income

I always go back to this one truth: your money has to reside somewhere. And when your income increases, it’s important that you have somewhere for that money to reside.

What typically happens when a family’s income goes up? Their expenses rise to meet it! It’s called Parkinson’s Law, and we have to be diligent about defeating that law if we want to earn our financial freedom. One of the best ways to prevent it is to have a plan for that increased income on the horizon and be ready to execute when that time comes.

Consideration #2: uninsured spouse (and children)

One of the most common holes in a family’s financial plan that I come across is that only the “breadwinner” of the household is insured. What a mistake! As we all know, the stay-at-home parent’s job is one of the most difficult (and important) jobs on the planet. Yet because that parent doesn’t produce an income, we mistakenly disregard the need for life insurance on them.

Have you ever thought, “if tragedy struck my spouse, God forbid, and I had to pay a full-time nanny to care for my kids while I go to work, how much would that impact my family’s finances?” If you haven’t thought about it, it’s time you did. Cuz that ain’t gonna be cheap!

I always always recommend the stay-at-home spouse has a large enough life insurance policy so that if the worst-case scenario occurs, the family will still be able to function financially without interruption (not to mention have more time to focus on grieving and healing without having to work to pay the bills at the same time).

Consideration #3: windfalls

Most of us, at one time or another during our lifetime, can expect to receive some sort of financial windfall. It may come as an inheritance from a parent or profit from selling a home or business or maybe your child starts a youtube channel called “sounds glass makes when it shatters” and starts earning millions each year. Whatever it is, that money has to reside somewhere, right?

With proper planning, you can have a policy ready to accept that windfall (or series of windfalls in the case of a successful youtube channel).

Consideration #4: earmarked funds

When you start thinking in terms of “my money has to reside somewhere,” you can start getting creative about how to move your money from where it currently sits to moving it inside a cash value life insurance policy instead.

Many of us save up money throughout the year (or years) for things like charitable giving, tithing to our church, quarterly business tax payments, real estate escrow, college savings, and more. Instead of storing that money in a commercial bank while you’re waiting to use it, this would be a perfect opportunity to create another cash value life insurance policy in which to store that money until you need it. In other words, create an asset with the cash that is earmarked for other expenses before you spend it!

I am always here to help guide you through your journey. Use my scheduling link to find some time for us to connect whenever you want to talk.



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