In past content, we’ve discussed utilizing life insurance for FDNY members to protect a max pension option. In applying this strategy, we’ve talked about implementing this FDNY life insurance component before a firefighter retires. This is important because the acquisition of life insurance is dependent on health and age – and if one waits until retirement, one’s health may not be conducive to qualify for coverage and the older one is the more expensive the coverage becomes.
In addition to this pension strategy, life insurance can also play an important role at other stages in a firefighter’s life and career. I’d like to briefly address this role here.
When Should You Think About Life Insurance?
One of the first times you should consider having life insurance is when you get married. Life insurance coverage will protect your spouse financially should something happen to you. After marriage, many times a mortgage and young children are soon to follow. This usually occurs within the first 10 years of being on the job. During these early years, term life insurance can be a very economical way to achieve multiple objectives.
As we’ve discussed, term life insurance comes in various lengths of time – anywhere from 10 to 40 consecutive years can be covered with term life insurance. For example, contract with $500,000 of death benefit of 20-year term insurance will protect your beneficiary for a 20-year period and then essentially expire after that 20-year period. A great characteristic of most term insurance contracts is that you can convert this temporary coverage to permanent coverage for a period of years without having to undergo a medical examination. To be sure if this provision exists on your contract, you can reach out to the life insurance company or our team can walk you through that process.
When first on the job and newly married, many times we’ll help a member of the FDNY consider term life insurance. This will allow the member to have a decent amount of coverage for a very small amount of money. It will also lock in the person’s “insurability” – so if the member ever wanted to convert this temporary insurance to permanent – they would have that option anytime during their policy’s conversion period.
Factors to Consider
Once a mortgage and children are in the picture, we will consider longer term periods for protection. When protecting your children, a common FDNY life insurance approach would be to take a look at 20-year term. This will offer coverage until your child finishes college. Once a college-grad, your child will be less financially vulnerable to the death of a parent than any of those years prior. When buying a home, we often like to utilize mortgage insurance by implementing 30-year term life insurance. So, if anything happens during those 30 years, a life insurance death benefit would be available to help your spouse pay off the mortgage and have the means to remain in the house with the children and not have to move unexpectedly.
So, no matter what stage of life one is in and assuming reasonably good health, an inexpensive life insurance option is possible. Term life is very cheap to begin with – and purchasing coverage in your 20’s, 30’s and 40’s is exceptionally so.
Again, as discussed in other content, once a firefighter reaches their late 40’s or early 50’s, we really want to start talking about and planning to utilize life insurance to protect your pension. This might mean taking existing term insurance and converting it to permanent, dropping your existing term and putting new term in place or some other strategy or combination of the two.
Life insurance can protect you in many ways – and utilizing term insurance at various stages of your career can be a very inexpensive strategy to achieve this goal.