Life Insurance for Boomers, Gen Z & Everyone in Between

Dear Millennial: To your parents, the subject of money is taboo. To your kids, it’s eye rolls and ”not now, I’m busy.”

But you? You’re the one who thinks about everything, plans for anything, and plays the team captain for all the generations of your family.

So one of the best things you can do for your parents and children is set some time aside for a chat about life insurance. Yep, life insurance. The point of the chat is to help both generations understand:

• Why they need it and how insurance works
• If they have an existing policy, what does it cover?
• If it’s time to revisit their coverage needs

Here’s your game plan…

First, start with yourself

Your parents are planning their retirement years and your kids are slowly becoming more independent. Now is the time to take stock of your own situation and think about what’s next for you. Below are the three most common reasons to re-evaluate your life insurance needs.

You’re making more money: The more you make, the more you need to replace in order to maintain your family’s standard of living if something were to happen to you. If you’ve had a few promotions since you originally bought your life insurance policy, you may want to up its value.

Your expenses have gone up: Buying a second property or investing in a business may increase your wealth, but it also adds to your annual expenses and increases your tax liability* at death. This is another reason to add more coverage to your life insurance policy. (Or maybe you simply want to layer in an additional policy to better suit your growing needs.)

Your health status has changed: If you currently have term life insurance, your policy may be eligible to be ”converted” to a permanent plan without any medical evidence if you choose to do so before your 65th, 70th, or even 75th birthday (the age limitation may change depending on the company and product). This is a good option if you wish to have life insurance that outlives you – and to be there for your family when they need it most.

Next up, adulting your parents

You and your parents may be duplicating efforts without knowing it. They might be thinking about their legacy and how to give you and their grandkids a leg up. Meanwhile, you’re worrying about them as well as your kids. Carve out some time with your parents and ask a few basic questions, like:

How much are they paying, and could it be too much? If large debts like their mortgage are already paid off, your parents could be insured under a plan that exceeds their needs – meaning they could possibly reduce the amount of life insurance they are paying for. This could translate to lower monthly expenses, a better retirement, and a larger legacy to leave behind. Of course, this sort of decision should not be taken lightly, which is why they should always obtain professional advice before reducing coverage.

Do they have enough protection should something happen? If, on the other hand, it’s been a long time since your parents purchased life insurance, their coverage might not have kept up with today’s cost of living. They may need more than they think to keep their spouse financially secure for life.

Who are the beneficiaries of the policy? Explain that there may be tax-effective options when it comes to choosing who will receive the life insurance payout (i.e., the money designated loved ones will receive in the event of their death). This will also give you a chance to review your parents’ wishes, and make sure they have up-to-date wills and powers of attorney.

And, don’t forget the kids

Buying a life insurance policy for a baby, child, or teen can give them a tremendous advantage later in life. If you already have coverage for your kids, it’s important they understand why it matters and why they should consider keeping a policy in place.

Affordable coverage for life: Once your kids have life insurance, they may be able to renew or convert it regardless of changes to their physical health or lifestyle choices that make you cringe – like mastering the half-pipe, snowboarding, or big-wave surfing. Not to mention, life insurance is less expensive the younger you are. So the earlier you purchase life insurance for your children, the less expensive it may be.

The ability to increase coverage: If, at the time of purchase, you add a Guaranteed Insurability Option** to your child’s policy, you have the option to increase the amount of coverage as they get older. Same goes for when you transfer ownership to the kids when they’re all grown up: They’ll be able to up their policy as their needs increase. Whatever the case, you’ve made it possible by purchasing life insurance for your children.

Long-term wealth building: A permanent life insurance policy with a cash portion comes with a lifetime of benefits, thanks to what is called the cash value (i.e., cash that is accumulated within the policy that can be accessed at any time***). This ”emergency fund” can become a major source of protection and wealth for a young adult later in life. Either way, it’s important to help them understand what it means and the protection it can provide them in the future.

Pulling it all together

As the captain, coach, and cheerleader of the family, you know how to best approach this important topic with each generation. So schedule a family meeting, and encourage an open conversation about money as well as everyone’s short- and long-term goals. While the conversation may prove a little awkward with your parents and not very exciting for the kids, the outcome will bring you together and help ensure that you’re protecting what matters most: each other.

*Did you know? The executor of your will files a final tax return in the year of your death. Any taxes owed must be paid by your spouse, estate, or adult children.

**The Guaranteed Insurability Option provides you with the opportunity to purchase additional life insurance without undergoing a medical evaluation. Note that there are specific ages or life events on which you can apply for a new policy (e.g., if you get married or have a child).

***Taxes may apply if a cash value is accessed due to policy loan, policy withdrawal, or policy cancellation, and interest may accrue if the cash value is accessed via policy loan.