My parents are making me get life insurance. Help!
Dear Cheryl&Mack,
I've got a bit of a situation here.
My parents have worked incredibly hard and are worth a lot of money - that will be eventually taxed and handed off to the next generation - being me or my children.
So, while planning their estate, they insisted I get life insurance as part of their estate planning strategy, just as their parents did for them.
Here's the thing - I'm 25, and life insurance seems more like something for when I have my own family.
It seems like such a waste of money.
Does it make sense for me to invest in life insurance at my age for estate planning? Is it a prudent move that aligns with their strategy?
Thanks in advance!
Best,
Starting Out
Dear Starting Out,
It's great to see that your parents are thinking ahead with their estate planning.
While life insurance might not be the most exciting topic, it's a significant financial decision, especially considering the wealth involved.
At 25, life insurance may seem premature, but there are valid reasons for it.
Firstly, life insurance can be used to cover any potential estate taxes that might arise when the wealth is passed down to you or even your children.
You have to remember that your parents have life insurance to protect you - now they're just recommending you do the same, while you’re young, for your children.
Additionally, it can provide financial support to cover any outstanding debts or obligations that might need settling, if something happens to you sooner than expected.
Life insurance premiums are often lower when you're younger, which can be a smart financial move in the long run.
With a permanent policy, it's a way to secure coverage at a lower premium and potentially accumulate cash value over time - with a permanent policy.
Ultimately, the decision depends on your family's estate planning goals, financial situation, and comfort level with this arrangement.
It might be a good idea to have an in-depth conversation with your parents, possibly with the guidance of a financial advisor, to fully understand the implications and benefits.
Remember, while it might feel a bit complex now, estate planning decisions like this can positively impact your family's financial stability and future family.