Empty Nesters Still Need Life Insurance

Posted on Thu, Feb 17, 2011

Your children have graduated college and moved out of the house.  The term policy you purchased 20 years ago to protect your family is just about up too.  If you think it’s time to let the life insurance slide, you should think again.

empty nestEven though your children are grown and out on their own, the need for life insurance hasn’t gone away.  Many parents continue to help their children pay college loans long after they’ve graduated.  There are many reasons to buy a new term policy once the old one ends.  In fact, here are a few from the Insurance Information Institute:

To meet goals
You may need life insurance if your children are in college or not completely financially independent.  Remember, Social Security benefit payments for the surviving spouse and children, with some exceptions, stop when the kids leave high school.

To support other dependents
If you have parents, disabled adult children, or others who depend on you for financial support, life insurance would continue this support if you die before they do.

To meet commitments based on two incomes
Most dual-earner couples make financial commitments (e.g., home mortgage, loans, leases, etc.) based on their combined income. Life insurance on each earner enables the survivor to continue to meet those commitments.

To pay unplanned expenses caused by an early death
Young people don’t generally plan to have savings available to pay for funeral and burial costs, final medical expenses, estate administration and transfer costs, and federal and state income and estate taxes. Life insurance can cover these costs, which can easily reach tens of thousands of dollars.

To create a financial “safety net”
Conventional wisdom says each household should have an “emergency fund” equal to about half a year’s income, to meet surprise unavoidable expenses. If the primary earner dies, a household without an emergency fund would be even more financially vulnerable. Furthermore, it could also be somewhat more difficult for the survivors to obtain credit. Life insurance can solve this problem.

Contact your insurance agent to discuss any changes in your current circumstances which would affect your insurance needs.  If you haven’t conducted a review of your entire insurance plan in over a year, now would be a good time.

Tags: life insurance