ARTICLE - Life insurance for empty nesters

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Date: september 24 2018

You have spent years caring for your children and now they have grown up and left home. Some have gone to university, some have moved for work and others are off seeing the world.

Nowadays you might have reduced responsibility, a new-found freedom and life insurance may seem dispensable. But for some empty nesters, financial protection is as important as ever.

Here are four reasons you might consider taking out life insurance:

1. Protect your partner

The cost of schooling may have come to an end, but if you still have a mortgage or other significant debts to pay off, life insurance could be worthwhile. Taking out a suitable policy would ensure any loans could be repaid if you or your partner died unexpectedly.

2. Give your children a helping hand

Your children have left home but it could be some years before they achieve financial security. They may run up enormous university debts before they have even begun earning a salary and a strong property market means they could struggle to get on to the housing ladder. A life insurance policy could give you peace of mind that even if you die suddenly, they will have financial support for years after you’ve gone.

3. Boost retirement savings

Retirement is now in sight and you and your partner are working hard to save for a good standard of living in your later years. If you or your partner die suddenly, the widow or widower may struggle to make up the difference in pension savings. Life insurance can provide a financial boost to help them through their retirement.

4. Care for elderly parents

Many of us will face the prospect of caring for aging parents as the cost of long-term care continues to rise and questions about who will foot the bill in the future remain. Children are often called upon to help out financially.  A life insurance policy means you can contribute to your parents’ future care even if you die before they do.

When life insurance isn’t a good idea

As you become older, the cost of paying for life insurance can outweigh the benefits your beneficiaries will receive. Although it’s still possible to get good value life cover in your 50s and even 60s for shorter terms, the premiums may be high.

Over-50s life insurance policies typically promise to pay a fixed lump sum when you die, usually to help pay for things like funerals and other expenses. However, look out for the small print and product features on some policies. Some will simply return your premiums plus a percentage of what you’ve paid in rather than the full sum assured if the insured dies within a set period from first taking out the policy. This may be as long as two years.

With these types of plans you are insured for as long as you keep paying the premiums. If you stop for any reason your cover ends. If you live a long life from taking out the policy, you could find yourself in a situation where you have already paid more in premiums than the plan will pay out to your beneficiaries, but if you stop paying the premiums your beneficiaries won’t get anything when you die.

Before you take out life insurance, carefully consider how much the plan is likely to cost you and whether that represents good value for the protection it will give you and your family.

Note: Members of The Chef Alliance are covered by Liability Insurance, which is included in their membership benefits.  For more information, please contact our Success Managers.