Do I need life insurance if my kids are moving out?

Becoming an empty nester is a major life stage. You get some satisfaction in seeing your kids gain independence. And from living in a bigger and (Ahem…) quieter home. But the experience is also bittersweet and can lead to some soul-searching. Questions range from the trivial — How do I decorate my newly acquired guest rooms? — to the profound — What do I focus on, now that the kids are gone?

Between these poles lie some important questions. Downsize or stay put? Keep working or retire? And what about life insurance?

After all, most Canadians get life insurance to help protect their kids from the catastrophic financial impact of losing a parent. If your kids are financially secure and move out, does life insurance still make sense?

Generally speaking, you probably could consider having less life insurance, but still should have some.

5 reasons you might find life insurance useful as an empty nester

  1. Reduce financial impact. Consider the cost of a funeral and associated expenses, all of which will fall on your family’s shoulders.
  2. Reduce tax impact. If you’re leaving a legacy, the taxes on your estate are sometimes the biggest financial hit. A life insurance plan can help offset these costs, so your loved ones inherit more or all of your estate.
  3. Take care of your better half. Your surviving spouse or partner could continue living for a long time. Even if she or he has a career and continues to work, chances are your life calculations are based on two salaries until retirement, and two pensions. You may also still have a mortgage. Life insurance  can help to close these gaps, so your spouse or partner can live comfortably.
  4. Care for family. Even if you have no dependents at home, you may have elderly parents or a disabled relative who needs continued care.
  5. Care of your kids in uncertain times. Today’s “gig” economy means millennials aren’t as financially secure as previous generations were, and “secure” jobs may not be as secure as they appear. An extra financial cushion could help your spouse, in case one or more of your kids temporarily returns to the nest.

So, yes, life insurance may be a smaller priority for empty nesters. But the benefit is still there, and should be carefully weighed given your current and future situation.