Like many Baby Boomers, I grew up with parents who worked for me to have a better life than they did. My parents never finished college and believed the ticket to a good life was a good education. So I went to college, graduated, found a job, married and had children.
My wife and I told our children we wanted them to have a better life than we had. Then I began to think about what was going to happen to my wife and children if I were to die. Would they in fact have a better life? So I bought the gift of love: life insurance.
I bought life insurance to:
- Ensure my mortgage would be paid off so my family would have a place to live if I was no longer around
- Pay for my children’s college education if I was not there to see them graduate
- Pay off other debts that were incurred while my wife and I raised our family
- Pay for my burial costs
- Replace my income for at least a period of time so my wife had adequate resources to pay for child care and other family related costs
Who knows where all the years have gone? We had three children who are now in their late twenties and early thirties. Each of our children is healthy, happy and college educated with a good job. My youngest daughter is expecting in June, and I’m sure she’ll say to her baby, “We want you to have a better life than we had.” The last 35 years have had their ups and downs, but my wife and I have been very lucky!
As we began to plan for retirement we thought about:
- Financial planning
- Investment advisors
- Social Security and Medicare
- Wills, trusts, health care proxies
- Many non-financial related matters
- Life insurance
What do we do with the life insurance we have? Do we need more life insurance? Do the reasons we originally purchased life insurance still exist? Are there new reasons to own life insurance?
We’ve now paid off our mortgage and the debts we incurred while raising our family. All our children have graduated college and are no longer dependent upon us.
However, I earned a pension from a retirement plan that required me to make a choice between two options: single retirement or joint and survivor. For me, it was cheaper to take the single retirement option, and buy term life insurance on my life to provide my wife a large enough lump sum benefit to provide adequate cash flow in the event of my death.
Since we expect to live for many more years, I also hope to work or invest well enough to leave my children some sort of inheritance. The death benefits for life insurance are generally tax free. The benefits can be an inheritance of their own or can be used, if necessary, as a source of funds to help our heirs pay estate taxes.
You may have other reasons to carry life insurance. Life insurance is the gift of love and therefore the underlying purpose of life insurance really does not change when Baby Boomers retire.
For what purpose do you have life insurance? Do you need more or less life insurance in retirement?