Parenting is quite an emotional rollercoaster. From hearing the first words and utterances, to waving them off into the first day of school, bringing kids up is full of unforgettable moments. Probably, though, one of the most important-and times difficult-moments concerning parents is when their children leave home. Whether it be off to college or getting a job, this transition of kids flying out of the nest is pretty bittersweet.
It seems that now your children have finally reached financial independence, there is no longer any need to keep life insurance. Normally, life insurance provides for one’s dependents in case of one’s demise. That was necessary at a time when your children were still small or still dependent on your income. Having life insurance at the time was an assurance that they would be taken care of in the event of anything bad happening to you. Would you need life insurance once the kids leave the house and become self-sufficient? Yes, but due to another reason.
Insuring Your Spouse’s Financial Security
Your children may have grown up and become independent, but your spouse still relies on your income for a good standard of living. Here, a life insurance policy creates a layer of protection that can replace the recurring living expenses, like utility bills, groceries, healthcare expenses, and many others. Life insurance coverage for final expenses, like funerals-so incredibly costly-is also possible. The average funeral in Canada runs from $5,000 to $15,000. Beyond this, it can ensure that large financial commitments-like a mortgage or car loans-continue to be paid off. But without that financial cushion of life insurance, your spouse may struggle to meet those costs, which could come at the expense of lifestyle changes, downsizing, or sale of the family home.
Estate Planning and Legacy
Life insurance may create for your children, grandchildren, or heirs a financial legacy to be used to achieve major life milestones, such as post-secondary education, down payment on a home, or even to start a business. Alternatively, it may be used to equalize inheritances if your estate is comprised of nonliquid assets, such as real estate, art, or a family business. For instance, when there is a need for one child to inherit the family home or business, a death benefit from life insurance can help ensure other heirs are taken care of, dollar for dollar, without ill feelings. Business Continuity
Life insurance is one of the critical means of securing your business’s future. For instance, it may underwrite a buy-sell agreement, whose proceeds the remaining partners use to purchase the share of a dead partner in the partnership, thereby continuing the business, and fairly compensating the partner’s survivors. This would also provide liquid assets immediately to pay federal estate taxes and business-related debts, so you would not have to sell the business or other estate assets to come up with the cash.
Charitable Giving
Life insurance may be one of the available vehicles for making charitable bequests. Naming a charity as a beneficiary of your policy leaves a legacy and impact that can continue in support of causes important to you. This might be an important, valuable way to leave a legacy while at the same time offering potential tax benefits to your estate.
Why Life Insurance Costs More as You Get Older
Insurance companies perceive them as a greater risk and therefore come up with higher premiums for them.
When in the 40s or 50s, or in case of health problems, life insurance becomes really expensive compared to the earlier years. But by this time, your children would have become financially independent and you have gathered enough assets that would take care of your spouse along with satisfying other long-term goals, then continuing with paying for a life insurance policy may not appear so necessary. One does have to consider, however, that it may be necessary to take out cover in the event of something coming completely out of the blue, such as a critical illness, which could financially devastate one’s household.
Options to Consider If Health Issues Are A Problem
No Medical Exam and Simplified Issue Life Insurance offer workable solutions when health issues make traditional life insurance more difficult to secure. These forms of life insurance policies do not require medical examinations nor extensive health checks.
Though the premiums are more than ordinary policies, they nonetheless offer one avenue for making sure you are covered, even for those with pre-existing conditions or previously declined due to health problems. The approval is quicker since there is no need for a medical test, and they provide cover against health concerns. A large part of these policies also offers a critical illness rider, which grants one financial protection for serious diseases like cancer, heart disease, or stroke. The funds will help in paying treatment costs, replacing lost income, or saving you from dipping into your savings.
The bottom line is that retention or lapse of life insurance should be a very personal decision based on how you currently stand financially, your future goals, and peace of mind. You can make an appropriate choice after carefully assessing your needs with that of your loved ones by always keeping a keen eye on the present and, at the same time, planning for the future.
