Parents of adult children: Here’s 4 life insurance myths
Life insurance is easily one of the most confusing insurance products out there, because no one is ever sure when the best time is to purchase. With home insurance and auto insurance, it’s easy. You buy these products when you purchase, or before you close. But life insurance? There are numerous situations where you may benefit from its purchase, and then you’ve got to choose from the numerous different options that may be presented to you. It can be even more confusing if you’re the parent of adult children who have left the house.
Let’s say that your children are already grown. It’s likely that your house has been paid off and you may be about to retire (if you haven’t retired already!) It’s a good chance you’re under the assumption that you no longer have any need for life insurance. That couldn’t be further from the truth! There are many situations where you will be required to carry life insurance, even if your children are no longer financially dependent on you. Let’s dig into some life insurance myths for parents of adult children.
Life insurance myth 1: I should have enough money saved by the time I die to hand down to my adult children and their children.
Technically, this could be true. Long hours on the job, excellent prudent management of your finances, side-hustles, etc. – you could always be in a situation where you’re financially sound enough to not require life insurance. But what happens if you die unexpectedly, or don’t live long enough to achieve the wealth goals you’ve always wanted for your family? Things happen. While we don’t like to think about them – and certainly shouldn’t dwell on them – we need to think about the future in order to protect our loved ones. There could always be fluctuations that negatively impact your investments – which could affect your plans without you even needing to die. Life insurance is an alternative that creates an instant estate, leaving a legacy behind for your future generations.
Life insurance myth 2: My mortgage is paid off and my kids are financially independent. I don’t need life insurance.
Maybe that’s true, but if you died today, there’s still another person who could be left on the hook: your spouse. If your spouse were to live on without you for 10, 20, or even 30 years, without life insurance your spouse may struggle to maintain the lifestyle that the pair of you worked so hard to achieve.
Life insurance myth 3: It’s far too expensive to purchase life insurance later in life, even if I’m healthy.
Yes, life insurance can certainly get more expensive with age (especially if you develop a health condition) it shouldn’t be out of your price range. A man in his mid to late fifties who doesn’t smoke can technically purchase a half million dollars’ worth of life insurance for a 20-year term policy for under $2,000/year. That amount is nearly halved for a healthy, non-smoking female. If you know you’ll have an ongoing need for coverage, don’t assume you won’t be able to afford it.
Life insurance myth 4: I’m not subject to a federal estate tax liability, so I don’t need life insurance to help me pay any outstanding debts.
Tax laws do not tend to stay constant, and you might find yourself in a hard place if you’re suddenly subject to a federal estate tax liability. Even if nothing does change, this is sort of a weak reasoning as there’s numerous other reasons why it’s imperative to maintain life insurance coverage in the later stages of life. Life insurance can pay out for things like outstanding debts, probate costs, funeral arrangements, provincial estate taxes, etc. – and by doing this it allows your loved ones to take their worries and focus off of their financial situation (and obligations) and spend time going through the grieving process. In addition, if you have an estate or a business, life insurance can help to equalize the inheritance for your heirs.
Conclusion
A big decision, such as purchasing life insurance, is not something to be made lightly. Your life situation could change at any minute, and you should always keep in mind what could be impacted by your unexpected passing. The good news is, you don’t have to make that decision alone! Discuss your life insurance needs with the help of the friendly life insurance brokers we have here at Panda7. We get to know you and your circumstances and want to help you find solutions. If you want a better sense of your needs as a parent with adult children, consult with us today.
