Do Empty Nesters Need Permanent Life Insurance?

​Many people buy their first life insurance policy when they have children. The birth of a child creates an obvious life insurance need. Your child is dependent on you not only for financial support but also for care and guidance. If you pass away, the child could face substantial challenges, some of which can be solved with a life insurance benefit.
 
What happens, though, when your children grow up and are no longer dependent on you? Do you still need life insurance protection? After all, if your children no longer rely on you for financial support, they may not face the same challenges after your death. 

You might be tempted to cancel your life insurance policy. That would allow you to save the money you pay on premiums. If your policy has substantial cash value, you could use those funds to pay for other life goals.
 
At first glance, it may seem like a no-brainer to cancel your policy. However, there are good reasons why you should consider keeping your policy, even if you no longer have minor children in the home. Below are a few ways in which you and your spouse could benefit from your life insurance policy:

Spousal support after your death.
Your spouse may not have to care for minor children after your death, but that doesn’t mean he or she won’t face financial challenges. You could have outstanding debts related to your mortgage, credit cards or even a business. You could need long-term care at the end of your life, and your spouse may be left to pay the bill. Life insurance can help him or her pay these expenses and overcome any other financial difficulties.

Legacy for family members.
Your children and grandchildren may not be dependent on you, but they could still benefit from your life insurance policy. You could leave the death benefit to them as a final gift or form of assistance.
 
For example, they could use the money to start a business, fund their college education or achieve other big life goals. Your life insurance benefit could give them a jump-start on their own retirement savings. Remember, life insurance benefits are usually tax-free, so your benefit could be an important and meaningful legacy for those who mean the most to you.

Supplemental retirement income.
If your policy has accumulated substantial cash value, it may actually be more helpful if you keep it in force rather than cash it out. That’s because you can tap into that cash value in retirement and take supplemental distributions in a tax-efficient manner.
 
Most permanent life insurance policies have loan provisions that allow you to “borrow” funds from your cash value. Since the distribution is classified as a loan, it’s tax-free. You have to pay back the loan. If you don’t, however, the balance is simply deducted from your death benefit. You may want to keep the policy in force to serve as a backup income source during retirement.
 
Ready to analyze your life insurance needs? Let’s talk about it. Contact us today at Sprouse Financial Group. We can help you review your goals and develop a strategy. Let’s connect soon and start the conversation.


Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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