The recession took the wind out of many baby boomer’s financial sails. These 75 million Americans have more debt in retirement than any generation before them, says Insurance News Net’s article, “How To Use Life Insurance In Better Estate Planning.” The families of boomers who purchased life insurance may find themselves in a better position than those without. The proceeds may be needed to provide surviving family members with much-needed funds when the main earner has passed to pay off debts, including a mortgage. Funds may also be needed to pay for funerals and final expenses.
If you have sufficient assets to pay your debt when you pass away, your creditors will receive their payments from your estate. However, be aware that it matters if your home is your primary asset and if your spouse or another family member is a co-applicant or co-signer on an account, because your mortgage and other debts, such as credit card bills or car loans, could become their responsibility.
Carrying debt in retirement is very common today. Life insurance can help provide peace of mind knowing that provision has been made for the comfort and security of your family. Boomers should conduct an inventory of their finances and debt, weigh their options and find a life insurance policy that will help with any potential financial burdens upon death. Let’s look at some tips to help you decide, if purchasing life insurance is right for you:
1) What’s your need? Do people depend on you financially? Do you have sufficient funds to cover your final expenses? Consider life insurance to help protect your family's future, including paying for tuition for children or beneficiaries. Your policy’s beneficiary can use the money for living expenses or to pay off debts.
2) Educate yourself on the different types of life insurance. There are three major types of life insurance coverage—term life, whole life and universal life. All three pay a death benefit, but each can differ in terms of coverage length, premium flexibility, cash value accumulation, and distribution.
3) Determine the amount of life insurance you need. What amount of coverage would your family need if something happened to you? What expenses would have to be covered or debts paid off? What amount is earmarked for savings? The answers will help you determine the type and amount of life insurance you'll need.
If you’re a baby boomer, all of these issues should be discussed with your estate planning attorney when you are creating or reviewing your trust, will, and other estate plan documents. It’s better to know what the future will bring, even if you are not in the ideal financial circumstances that had previously thought you would be at this age. At least you can take comfort in knowing you are not alone.
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Reference: Insurance News Net (January 7, 2019) “How To Use Life Insurance In Better Estate Planning”