A Baby Boomers Musings about Death and Life Insurance

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If you are a "baby boomer" like myself (born between the years of 1946 and 1964), you
are probably thinking about a will or a trust.
I opted for a revocable living trust because it is more flexible than a will and is not required
to go through probate. You can also save your heirs from some significant tax liabilities
with a trust.
I was reviewing my Trust yesterday after about 7 years, which was actually pretty reckless
of me after 7 years because I noted to my horror that I still had a "crazy ex" listed as the
What really caught my attention were my life insurance policies. Firstly, they younger you
start paying the premium, the cheaper it is. I remember paying almost twice as much in
my 30's as I did 10 years later for basically the same cash award after death.
I also realized that the TERM of my policies would expire in about 15-20 years. What
makes this significant is that life insurance policies are used as a means to ensure that
your heirs actually inherit a contracted amount of money after your death. This is a good
idea, because depending on your age, you may not have yet built up any other significant
assets such as paid off real estate or bank/investment savings. The important point to
realize however is that after your TERM expires, you have the option to extend the policy
for a ridiculously high premium (obviously because you are older and a higher risk of
dying) or simply terminating the policy. It does not make sense to extend as it’s probably
better to save the premium instead. If you terminate, then suddenly your heirs no longer
have a life insurance to inherit.
So why do I find this to be important? Firstly, without a life insurance policy in say, your
mid 60's or early 70's, you are now back to relying on the value of your net assets.
Because you live longer, you spend more and you may find yourself depleting your life
savings to survive, especially if you are a self-sufficient parent and abhor the idea (given
the choice) of your offspring having to provide for you during old age.
Hopefully by the time you reach the age where your term life insurance expires, your kids
would be comfortably successful and able to fend well for themselves and family. Then
perhaps you can live a guilt free life enjoying the fruits of your life long labor until death do
you part.
Many of us however are conditioned (perhaps even genetically) to leave behind an
inheritance. There are some "compromises" available such as "reverse mortgages" which
let you borrow against equity in your real estate with the loan principle (and interest??)
only becoming due after your death. This would be paid out of your estate and with good
financial planning there might still be enough left as inheritance for the offspring.

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