According to a study conducted by the Insurance Information Institute earlier this year, couples that feel they no longer need life insurance after their children are grown could leave themselves vulnerable to major financial problems. The research noted that life insurance is bought by policyholders to protect a surviving spouse and minor children. However, after a couple’s youngest child reaches 18, these policies are typically allowed to lapse.
The study went on to recommend that even though the children are grown, college tuition has been set aside and the mortgage is almost paid, couples should still discuss with their licensed insurance agent the benefits of continuing their current coverage or purchasing another life insurance policy before their existing one comes to an end of the term. The most important reason for doing so is income replacement. To be eligible for Social Security survivor benefits, a surviving spouse must be at least 60 years old. However, these benefits are allocated on a reduced basis because a surviving spouse must be 65 or older, depending on their late spouse’s birth year, to be eligible for full Social Security survivor benefits. Life insurance can help replace lost income for the surviving spouse when a wage earner passes away.
When a couple is considering how much life insurance to buy, the Institute recommends they determine how much they will need to replace what is referred to as the “hidden” income that is lost when a wage earner dies. Hidden income is money an employer contributes to a 401(k) or similar savings plan or uses to pay for employee health insurance coverage.
Reasons to Keep Life Insurance for Empty Nesters
- To Pay for Financial Commitments
Even when the kids are grown, you and your spouse may still be paying for your house mortgage, cars, credit cards, or loans. It is also possible that even if you already have set aside some money for your children’s college tuition, there are still other living expenses that your children may need while in college. If you pass away, these could be a burden to your surviving spouse. Having life insurance can cover these financial liabilities and can lessen or eradicate the possible financial difficulties of your surviving family.
- To Care for Dependents
Parents will always look after their children. There are parents who have children with medical conditions and special needs. Even if they become adults, they will not be able to support themselves and would need their parents to help. If the wage earner dies before their child that needs special care, his life insurance benefits will still be able to provide for his child.
- Additional Retirement Fund
If you pass away prior to retirement age, Retirement Benefits may be reduced. Having a Life Insurance can provide another source of income for your surviving spouse and adult dependents to sustain their daily needs. Retirement Benefits may not be enough to cover for their daily living expenses. Having a Life Insurance can provide great financial support to the families that are left behind.
- To Pay for Final Expenses
The early passing of a loved one can leave the family unprepared. Funeral expenses and unpaid medical bills can blow up to thousands of dollars. The benefits that the beneficiaries can get from life insurance can be used to cover these expenses. This will give your family time to mourn rather than worry about how to pay for the expenses incurred with your death.
- To Provide Income to Surviving Spouse prior to Social Security Benefits
If you pass away and your spouse is not yet 60, she will not be able to receive any benefits until she reached the age of 60. This is commonly called the blackout period. Also, when your kids are already done in high school, they also do not get any Social Security benefits. Benefits that can be received from your Life Insurance will provide an income to your surviving spouse so she can continue to live her life. This is especially important if your spouse is a stay at home partner. She will just depend on your retirement and social security benefits. The money they will get from your Life Insurance will surely help them get by on their day to day needs.
- To Take Advantage of Living Benefits from Life Insurance
Permanent Life Insurance does not only provide after-death benefits but also living benefits. You can tap on the cash value of your insurance to pay for medical bills when you get old or pay off loans and mortgages while you are still living. When we get older, we get to have illnesses that come with old age. Medical bills can easily go up and having a cash value on your life insurance will definitely minimize your worries on paying off hospital bills.If you have Term Life Insurance, you can get the Return of Premium rider to your insurance policy. This way, if you outlive the term of your policy, you can get a full refund of your premium payments. You can use this amount of money for your needs or other living expenses.
It is important to determine what you need to provide for your surviving family. You can discuss this with your spouse so you can decide which life insurance is best for you. Also, it is best to contact a licensed insurance agent that can help you find the best insurance that is fit for you. This way, you can get your money’s worth in buying Life Insurance. Having insurance that works for you will give you peace of mind knowing that even if you pass away, your family will be taken care of. Your surviving family will also have the financial security to live on with their lives after you are gone.
To find out more about Term Life Insurance and to get a free and confidential quote, call the professionals at BBIFinancial at (800) 958-1525 during normal business hours or contact us through our website www.BBIFinancial.net for more information.