Life Insurance For Baby Boomers

The best use of life insurance for baby boomers is to not leave dependents with financial burdens. However, as children become independent, debts are paid off, and obligations are met, the need for life insurance dissipates. Life insurance is not a productive investment, like stocks. So, what should be done with excess life insurance, particularly if we need cash for living and to pay bills?

On average, boomers who turned 65 in 2011 are expected to live until they are 85.2 years old. These burgeoning boomers will be active through their advancing years. They will travel. They will move to warmer climates. They will buy long-term care insurance, pay rent to senior citizen facilities, and pay on average $8,000 per funeral. In order for boomers to afford their desired lifestyle, they should consider their life insurance as an asset and put it to the best use.

Here are some suggestions for boomers to make the best use of life insurance:

  • Be certain their life insurance is structured to be most cost efficient. Less expensive policies could be available today, compared to when it was originally purchased. Consider trading the old policy for a more affordable one.
    • Use term insurance, but be sure it is convertible to permanent insurance. Term-convertible life insurance provides for financial options in the future. For example, if your health changes for the worse, you can still convert your policy to permanent without additional underwriting. Moreover, it is possible that the permanent insurance could be sold for an amount greater than the surrender value.
    • Don’t keep life insurance in-force to provide a financial windfall to children, unless there is more than enough money available to live comfortably, service all obligations and pay premiums until you die.
    • If your life insurance exceeds the amount that is necessary to provide liquidity to satisfy obligations, then consider selling it or surrendering it. At least dispose of it so the cash that would be spent on premiums can be better used to enhance the quality of life.

According to 2010 AARP research, boomers are most concerned about their health and financial security. To alleviate these concerns and to enjoy their desired lifestyle, boomers should take appropriate action to find the best use of their life insurance policies.

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