The book The Charles Schwab Guide to Finances After Fifty: Answers to Your Most Important Money Questions addresses the issue of whether or not a person needs life insurance once their kids are grown. It lists five questions people need to consider when making this decision as follows:
- Do you have a financial obligation? (such as a very large debt)
- Do you have a spouse or other dependent with on-going needs?
- Are estate taxes a concern?
- Do you want to leave a large portion of your estate to charity?
- Do you own a business?
If you answer any of these "yes", you may need life insurance well beyond the time when your kids are grown.
Here's my position on each of the above:
- I do not have a large financial obligation. In fact, I have no debt.
- I do not have a spouse or other dependent with on-going needs.
- Estate taxes are an issue for us, but we 1) plan to give away enough of our assets before we die so it's not an issue and 2) have an estate plan to minimize taxes.
- We will leave some of our wealth to our kids and some to charity. We want the kids to have enough to be provided for in part, but don't want them to "hit the jackpot" when we die. It's a balancing act for sure.
- I do not own a business -- at least one that would require me to have life insurance.
At this point, we are self-insured and will let our term life insurance lapse when it expires (which is about seven more years.) By this time, our kids should be out of college and on their way.
What's your take on this issue?