Insurance Information Institute Says Empty Nesters Still Need Life Insurance

Posted in Life Insurance , Term Insurance

March 30th, 2010

If youve been thinking about dropping your life insurance coverage because your youngest offspring has flown the coop, youd better think twice. According to the Insurance Information Institute (III), dropping your life insurance when your 18-year-old leaves home could leave your family vulnerable to serious financial problems.

You Should Keep or Renew Your Term Policy

The Insurance Information Institute noted in a new report that many parents feel that they can breathe a sigh of relief after their last child has left home and quickly cancel or allow their term life insurance policy to lapse. The institute stresses that this is not a decision that should be made without first thinking it through because the repercussion could be devastating.

For instance, suppose you decide to drop your term insurance after your last child leaves and soon after, your income-earning spouse dies unexpectedly. Not only are you left with no way to pay the bills for your home, but if your young adult children need support, you cannot help them.

Other Reasons to Keep the Policy

According to III, this is not the only reason to hold on to your life insurance after your kids have left home. Here are a few more:

• Help children finish college: If you have a child who is in college and not quite financially independent, you could help pay off expenses with a term life insurance policy, or any other type of coverage you may have.
• Support your other dependents: If you have dependents or disabled adult children who need continued care, dropping the policy could leave them without financial support.
• Cover a Social Security blackout period: If your spouse is the primary income-earning and passes away before you qualify for Social Security benefits, you may find yourself in a jam.
• Offset reduced Social Security survivors benefits: If you receive Social Security survivor benefits earlier than the full-benefit age (usually 66-67), the benefit amount will be permanently reduced. Life insurance could offset this decrease in benefits.
• Offset other lost retirement savings: If your spouse suffers an early death, he or she may not have gotten salary increases to boost employer pension benefits and/or IRA contributions.
• Meet commitments based on two incomes: If you had two incomes and lose one, keeping your term life insurance policy could help you maintain the double-income commitments.
• Manage unplanned expenses due to early death: In the unfortunate circumstance that you or your spouse were to die earlier than expected, you would not want to leave the responsibility of funeral and burial expenses on your children.

It may feel tempting to drop the term life insurance policy after your kids have left home, but as you can see, there are plenty of reasons to hold onto your life insurance. So before you give up this incredible benefit, review the list above to make sure none could apply to you. Start looking for a low life insurance quote today!