There’s no time like the present for life insurance

Mark Thomas, CLU, ChFC, Senior Vice President, Aon Insurance Services

September 25, 2018

Purchasing a home, getting married, having a child – these are monumental moments in life. In conjunction with celebrations, these moments warrant thought and preparation about the best ways to protect what matters most in the event something were to happen. Life insurance is there to provide that protection.

Even though it seems intuitive that life insurance is a must, it is not always a top-of-mind strategy. Indeed it is human nature to shut out thoughts on mortality. What’s more, most people spend more time planning vacations than they do on organizing their finances, particularly determining life insurance needs. For CPAs, the same holds true. Even though they are entrenched in the world of finance, life insurance is not always a CPA’s specialty, making it all the more important that they become informed and tap appropriate resources to ensure that they buy the right type and amount of coverage for their family’s needs.    

How to determine your specific life insurance needs

The first step to determining life insurance needs is taking the time to do independent research. Understand the market, build a list of questions and start to outline a plan. Next, use readily available tools to get a more defined understanding of how much coverage you’ll need. For example, this life insurance needs calculator helps break down life insurance needs based on your individual profile using factors such as income, marital status, number of children, outstanding debts, existing assets and more. Lastly, turn to the professionals and talk to an advisor. A life insurance professional who specializes in the space will be able to provide that extra guidance and advice to make certain you’re making the best choice for your situation and needs.  

When to buy life insurance

Like many things in life, it is best not to leave things until it’s too late. Purchasing life insurance when you are young and healthy allows you to lock in your rate and your insurability. That is, your policy is fixed for the term you decide upon. If you wait, you are more likely to develop pre-existing conditions as you age, making your insurability more uncertain and expensive.

Picking a policy

CPAs may be eligible to purchase life insurance benefits through their employer. The amount of coverage provided is typically a multiple of your income. For example, if you earn $100,000 each year, and your company provides you with two times your annual salary, your beneficiaries would receive a $200,000 benefit if something happens to you. However, rarely is the amount of employer-provided coverage sufficient. What’s more, if you leave the employer, you lose the coverage until benefits at your next job kick in, which could leave you uncovered for up to several months.

To cover this gap, there are several different types of life insurance policies, each with their own benefits and nuances, which you can purchase through an agent:

  • Term life insurance policy. With this type of policy, you pay a premium to the insurance company to offset your risk of death. In the event of death, the insurance company will pay out the proceeds to your beneficiaries.
  • Cash Value life insurance policy. For this type of policy, as you buy life insurance you will pay more upfront but will get cash back and develop equity in the life insurance plan overtime.

So, after taking time to celebrate a major life milestone, take a little more time to plan your family’s financial future, in the event something should happen to you. Life insurance is the only financial strategy to provide a large lump sum of cash to your loved ones when they need it most. To learn more about the AICPA Member Discount Program, visit