Estate Planning for the Echo Boom: It's a Matter of Life and Death
NEW YORK ( MainStreet) When we think about estate planning, what is the first thing that should come to mind?
Well, the basis of estate planning is to whom and how do you want your estate to pass on to your heirs.
For younger people, those who may not have much of an estate to consider yet, estate planning is often put aside until later in life, after they've accumulated or inherited assets, and sometimes after they've married and had kids.
One aspect of estate planning which is frequently overlooked by younger investors is life insurance.
Life insurance is not necessarily the favorite topic of most people, because it forces us to consider our death and who wants to think about that?
But you should, and the younger you do, the better off you might be.
Older is more costly
Now I can speak to this subject authoritatively, because when I was younger I didn't even consider life insurance...
It wasn't until I was married, and especially after I become a father, that it became important.
When I was 25, there wasn't anyone who was financially dependent on me. If I died, I assumed my friends and family would be upset about it, but the lack of an insurance policy payout wouldn't have negatively affected anyone.
But here's why I was wrong to ignore life insurance...
For one thing, the older you are, the more expensive it becomes. Every year you age increases the cost of insurance.
The second reason is because for some insurance policies - those that also have a savings feature - not only are they less costly when you are younger, they also will accumulate more cash value. That way if you do not die young you'll have the tax-deferred cash value to use as a retirement savings account while still maintaining the death benefit.
The third reason to get insurance when you are younger is because for some of us, our health may worsen. People do develop conditions as they age. A condition that you didn't have at 25 could make it prohibitively expensive to buy insurance at 45, or perhaps even make us uninsurable. I've seen this in my practice, where seemingly healthy people have conditions like diabetes or epilepsy, conditions they didn't have when they were younger, but now do and that prevents them from getting insurance that they need to protect their families.
What Type of Insurance?
Once you've decided you have a present or future need for insurance, you have to figure out what type of insurance is the right kind for you today and many years down the road...
And just like other types of investing - and yes, you can think of insurance as an investment - there are many different kinds that are utilized for many different purposes.