Reasons Older Famillies Should Consider Term Life Insurance

By Tes Kurtz on January 29th, 2010

Term life insurance is often thought of as an insurance policy for young families with small children. However, families with adult children, couples approaching retirement, and couples without traditional dependents may each have reasons to consider term life insurance policies. According to the Insurance Information Institute (III), term life insurance needs can provide financial security even in later years.

Financial Stability

Many couples with adult children do not see the need for term life insurance. Such couples may have ample savings and a mortgage that is nearly paid off. Although these are among the financial obligations taken into consideration when calculating the amount of life insurance needed, you may have other financials obligations that you have overlooked.

Term Life Can Provide for Dependents

Young children or non-working spouses typically come to mind when thinking of traditional dependents, but you may have others in your life who rely on you for financial support. For example, elderly parents, disabled adult children, or other loved ones may be among those who count on you for survival.

Lost Retirement Savings

During your final employment years, which are typically high-ranking years, you and your spouse are likely to receive many raises. Salary increases may boost employer pension benefits and IRA contributions. When a working family member passes away before retirement, savings can take a hit. Term life insurance policies may compensate for some of those reduced retirement savings.

Financial Safety Net

It is wise to have an emergency fund that is equal to about half your year's income. The emergency fund is meant to meet unexpected, and unavoidable expenses. If your family does not have an emergency fund, financial hardship may follow. Term life insurance might provide you and your loved ones with a financial safety net.

Couples Without Dependents

Married couples without children sometimes believe that life insurance is an unnecessary expense. Here are several reasons couples without dependents should consider term life insurance:

  • Two Income Families. Couples with two incomes usually purchase homes, and qualify for other loans or leases, based on combined income. If one spouse passes away, the expenses based on two incomes remain. Purchasing a term life insurance policy for each earner may provide the surviving spouse with the financial security to meet financial obligations
  • Final Expenses. Funeral and burial costs, final medical expenses, estate administration costs, and federal and state income taxes can add up. Expenses associated with death can easily reach tens of thousands of dollars. Term life insurance can help cover these costs

Social Security Concerns

Social Security benefits are funds that seniors might depend on for survival. However, there are several situations that may delay or reduce your government entitlement:

  • Blackout Period. Those who lose their spouses before the age of 60 cannot receive Social Security survivor benefits until the minimum age of 60. Those who are age 60 or over, but not yet 65, receive reduced benefits. The full Social Security entitlement does not begin until age 65 or older (depending on the spouse's birth year). Term life insurance can provide you with income during the Social Security blackout period
  • Reduced Survivor Benefits. If a spouse begins receiving Social Security benefits before the full benefit age, and subsequently passes away, the benefit is permanently reduced. The early death of a spouse, who begins Social Security benefits at an early age, can lead to a reduced income for the surviving spouse
  • Lost Income. Retired couples can each receive a Social Security benefit. But when one spouse passes away, the Social Security benefit of the deceased spouse is discontinued. This loss of income can result in a change in the quality of life for the surviving spouse

Term life insurance may supplement or bridge a gap in your Social Security benefits, or can provide financial security for couples without children. Additionally, adult children who have left your home are not necessarily financial independent--they may require your financial assistance from time to time.

To find the term life insurance policy that is right for your needs compare term life insurance quotes.



Source :
Do "Empty Nesters" need life insurance? • iii.org • http://www.iii.org/articles/do-empty-nesters-need-life-insurance.html
Life Insurance Needs Continue Even After the Kids Are Grown, Says the Insurance Information Institut • Oct 25, 2006 • iii.org • http://www.iii.org/media/updates/archive/press.763394/index.html

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