This is a great and important question. When does life insurance make sense to have? When is it a good idea for you to be investing your hard earned money into life insurance so that things can be taken care of after you’ve passed away? So let’s take a good look at this question so that you can understand the best way to go after your children are grown up and moved out of your home.
There are a number of questions that you need to ask when you’re trying to consider whether or not you will need life insurance in order to cover the needs of your family and loved ones after you pass away. Here are three of the most important questions that you need to consider during your research and the conversations that you have with your agent and your family.
Will what you have in savings (assets, etc) help to cover any liabilities that may need to be taken care of after you pass away? This is incredibly important to ask. You may not have to pay for anything for your children when they’re adults, but if you pass away with a lot of debt, or there’s no money to pay for the funeral costs, you’re going to leave them with a bit of a mess that they will have to deal with. Life insurance money can be used to take care of any unfinished financial business that you may have had at the time of your passing, thus making it easier for your family to mourn and live their lives.
Do you have a business that may need to be dealt with after you pass away? Businesses always make things interesting when one family member involved in the business goes away for some reason (death, divorce, etc). Life insurance can actually play an incredibly important role in helping your business partner(s) continue to move forward after you’ve passed away. It can also give a little bit of cash flow if it is needed during the first few months after you’ve passed away, so the other owners can reevaluate and move forward without having to worry about bankruptcy or other such issues.
Are there any taxes that you will have to take care of (estate taxes specifically) after you pass away? Assets are always an interesting thing to deal with, because you’re never quite sure exactly what is going to go where. Even if you leave things in a will, the estate may have to pay taxes on the things that are being given away (or the person receiving the item(s) may have to pay, depending on how you set it up). Either way, life insurance can play a significant role in helping to decrease and/or eliminate those costs for you and your family. You could, in some cases, pass on your assets to charity or other organizations where they won’t get taxed, and then use your life insurance to give as an inheritance to your adult kids, which makes them free from any taxes.
So basically, the choice is up to you. You may want to sit down with your spouse and your family and see how they feel about the decision that you are trying to make. You can also have that conversation with your insurance agent to see what he or she has to say about your current situation and how you should move forward. Overall, you need to do exactly what is best for you and your family, and that should guide the decisions that you’re making.