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Aug 5, 2021·6min

Life Insurance for Empty Nesters: Here's What You Need to Know About Financial Planning

Ever thought about getting life insurance as an empty nester? With a permanent policy, you benefit from factors like cash-value accumulation and tax-free savings, setting you and your loved ones up for the future–even if the kids have flown the nest. In this guide, we’re looking at life insurance for empty nesters and why it can be beneficial in your later years.

The kids have left the building

Your adult kids leaving home must bring on a range of emotions. You’re sad to see them go, but also, now it’s your time to enjoy that trip to Barbados you never got to take. Plus, there’s an element of pride seeing your children grow into adults doing their own thing and being independent–until they ask for a few bucks to cover the unpaid water bill in their new apartment, that is.

Where does life insurance come into all of this, you ask? Most people think life insurance coverage is for adults who have just had kids and want to protect their future. While that may be true with a term policy, permanent life insurance offers an entirely different dynamic.

It has several benefits, including the chance to build wealth while you’re still alive and access tax-free savings. But how, exactly, does that apply to your and your empty nester status? We’ve put together a few reasons why life insurance for empty nesters is a great idea.

But first… the benefits of permanent life insurance

A permanent life insurance policy has all the features of term coverage plus a whole lot more. Unlike term, a perm policy never ends, and you pay the same premium throughout the coverage. That means the amount you pay for your first payment stays the same throughout the 10th, 50th, and, well, you get the point.

There’s also a cash-value element that allows you to build wealth while you’re still alive. Essentially, you pay into two pots: one for your death benefit and another for the cash accumulation. Both of these pots grow over time, and you can access the cash value while you’re still alive.

Even better, that wealth you grow is tax-free, which means you can enjoy savings without paying the tax man. How does that work? When accessing your cash value, you can do so via a 0% loan to yourself. Because there’s no need to pay yourself tax, the loan is entirely tax-free.

When you pass away, the death benefit repays the loan. However, that death benefit has grown with each monthly payment, so there will still be plenty to leave to your loved ones.

Now, let’s look at how life insurance for empty nesters can help you in the short and long term.

Use perm life insurance to support your adult children

Sure, your adult children have left home to do their thing and enjoy a life of independence. That doesn’t mean they won’t rely on you for financial support, though. Most parents find themselves providing some kind of financial aid to their adult kids; whether it’s helping with student loans or paying off that credit card they took out naively.

Permanent life insurance benefits can help support your kids when they need it most, with the cash value going towards things like covering their college fees, or helping them get on their feet after fleeing the nest.

Or help out aging parents

Even if your adult children don’t require any financial help when they leave home, you might find that your aging parents are in need of assistance. Long-term care is a significant expense that can quite easily burn a hole in your bank account if you don’t have the right insurance coverage in place.

Many seniors find themselves in a situation where they can’t afford the costs associated with long-term care, and so the responsibility falls on you. Much like supporting your adult children, permanent life insurance can help you look after your parents as they get older and assist with the costs associated with long-term care.

You can support your spouse

While no one likes thinking about things like death, there needs to be an element of planning put in place–especially as you get older. The majority of empty nesters are used to having two incomes for the household. However, if one spouse was to pass away, the financial burden would fall on the surviving partner.

With a permanent life insurance policy, you can use the death benefit to ensure that your partner isn’t left in financial trouble if you pass. You can also add handy riders to the policy, giving you access to long-term care should you become seriously ill.

Supplement “lost” retirement savings

No matter how good your retirement plan is, the whole thing can be thrown into chaos if you or your spouse passes away unexpectedly. It would leave the surviving partner with the burden of making up for the loss of retirement savings.

Fortunately, a permanent life insurance policy can help offset the loss with its death benefit. It would ensure that either you or your spouse would be financially covered and could continue receiving retirement-level income uninterrupted.

Keep your access to great healthcare

The average 65-year-old couple will pay $260,000 during their retirement, and that’s before long-term care costs are even considered. If you or your spouse need the latter, then you can expect to pay an additional $100,000-plus on top.

It’s a significant chunk of money to think about. Yet, there’s no need for a stressful scenario if you have a permanent life insurance policy, which can help you protect your surviving spouse against increasing healthcare costs, as you can get access to long-term care.

Leave behind an inheritance

The cash-value element of your permanent life insurance policy can help you in life, while the death benefit is a smart way to leave an inheritance for your adult children and partner. Even better, they won’t need to pay tax on the money received as it’s tax-free.

Not to mention a portion of the death benefit can also be used to cover funeral expenses when you pass away. The extra funds can come in handy for your adult kids and ensure they don’t have to dip into their own fund to pay for your funeral.

In conclusion: thinking about the future

A permanent life insurance policy is beneficial for empty nesters, as it safeguards you against many potential tricky scenarios. There’s also the cash value aspect, which means you have something to look forward to from your permanent policy while you’re still alive. Life insurance for empty nesters is a smart move for anyone who wants to protect their family’s financial future and enjoy the odd benefit here and there while they’re still alive.

Check out some life insurance options for empty nesters by getting a customized quote with Amplify.

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