Who really needs life insurance later in life?
By the time we were in our 50s, I thought we probably didn't need much if any life insurance.
When I was younger — and had young children and sizable debts, including a large mortgage — the reasons to buy life insurance were crystal clear to me.
But after our children were grown, we experienced some financial success and could afford to build a dream house on the lake and buy a boat to go with it. Life insurance didn't seem important to me then because I wasn't worried about paying off a mortgage or a loan on those assets.
When Jim bought this life insurance policy, I was very skeptical. It seemed like a lot of money to spend on something that I thought we wouldn't need anytime soon. At 50, life seemed to stretch on forever.
But Jim, always the foresighted, money-smart man, persuaded me that if something happened to either one of us, we would still appreciate having cash from a life insurance policy to cover not only immediate demands for cash, but also ongoing obligations. Life insurance, he said, would give me security and peace of mind. He also argued that a life insurance policy was a good investment for people like us who were already maxing out our tax-advantaged retirement savings plans.
Fifteen years later, I blessed him for his wisdom.
What you can learn from my experience
What I didn't understand, before it happened to me, was the financial demands that come with the death of a spouse.
Have the conversation(s)
Hindsight is 20-20. If I had it all to do over, I would have talked more with Jim about life, death and money. I might have insisted on my having a larger role in managing our finances. If you haven't raised these issues with your spouse, there's no better time to do so than right now.
Both of you need to understand enough about your financial situation to know what to do in the event of the other's death, or even physical or mental incapacitation. Once a health crisis occurs, it's often too late to be figuring out what needs to be done.
I also might have considered spending even more on life insurance because it could have been a smart way to leave a bigger legacy to our grown children. While the need for life insurance is pretty obvious when you have young children, it also can be valuable later in your children's lives when they still have financial needs to be met, and perhaps families of their own.
Consider both short- and long-term expenses
This year, I renewed my own life insurance policy. When I die, the money will be divided among my three children. A portion will ensure that they have sufficient cash to pay my final bills, to hold a funeral and fly all the family in.
They can also use some of the money to sell my home and other belongings, and otherwise close the estate. The rest will help pay for my only grandchild's college education.
Life insurance provides a welcome source of near-immediate cash after a death, helping your family to begin their grieving process — and their new lives — without the threat of, say, going into debt or having to make dramatic changes right away.
Realize what life insurance can do for those you love
With an adequate amount of life insurance in place, you also can help meet the future needs of those you love — whether those needs include funding college educations, maintaining or completing mortgage payments, or providing for the wedding your child's always imagined.
Here's the bottom line for me: I don't want my death to be a burden on the people I love. I want to ensure that my children and granddaughter look back and say Mom and Grandmom did everything she could to make their lives better. And, for me, life insurance helps make that possible.