If you recently emptied your nest, you might start looking at your finances in a new light. You might now need to take a closer look at your finances. Do you still need to maintain some of the costs you have to pay now? Is your life insurance now less necessary? Those thoughts might cross your mind. If you want to re-evaluate your life insurance for cost benefit, now might be a time to do so. How can you approach the process?
Expenditures Drop for Empty-Nesters
Once your kids move out, you don’t have to take care of them as much as you once did. They can take care of themselves, so to an extent, you won’t have to spend as much money on them. You might not have to worry anymore whether they would have the money to support themselves if you die.
Therefore, you might take a look at your existing life insurance. During your children’s minority, you might have carried high levels of coverage. That way, the policy might have been able to support their needs if you died when they still needed income.
However, now that the kids are on their own, you might see no reason to keep a very high amount of coverage. For example, a $500,000 whole-life policy might no longer seem practical. If you don’t have debts or expect high end-of-life costs, then you might not actually need that much coverage.
So, if you feel like you pay for life coverage you might actually not need, then call your insurance agent. They can help you determine whether to adapt or switch your existing life insurance.
Adjusting Your Coverage
We don’t recommend that you simply drop or cancel your life insurance. That might leave you at a financial risk even if you don’t have kids at home. However, you can make changes to help your policy better fit you in later years.
- Whether you have term- or whole-life coverage, you can often reduce the final payout value. Survivors might not get a large sum when you die, but they might not realistically need it either. However, they might still benefit from a tidy sum to help them settle final expenses.
- If you have a whole-life policy, you might be able to convert it to a term-life policy. Term policies only last for a certain number of years. They are often cheaper to maintain than a full-life policy. However, if you decide to take this step, don’t forget to cash out any interest earned on the whole-life policy. Do not cancel the policy until you have the new term policy in place.
With care, you can adapt your life insurance to meet your needs after the kids move out.
Also Read: The Advantages of Having Life Insurance