Theory of Decreasing Responsibility

This theory further reinforces my point that term insurance and investing the difference makes more sense than having any type of cash value life policy.

IN THE BEGINNING YEARS...

• You may have kids
• Have a mortgage to pay off
• You probably have lots of debt (credit cards, student loans, car loans, etc)
  

...so you need lots of income protection, but you don't have much money saved.

IN THE LATER YEARS...

• Your kids grow up and probably move out of the house
• Your mortgage should be paid off
• You shouldn't have too much debt to pay (hopefully all your loans are paid off and you have taken control of your credit card spending)

...so you probably don't need much income protection or any life insurance, but you better have money!

When you are young, you may have young children to support, a new mortgage payment, and many other obligations. But you haven't had the time to accumulate much money to retire on. This is the time when the death of the breadwinner could be devastating and when you need coverage the most.

When you are older, you usually have fewer dependents and fewer financial responsibilities. Your kids grow up, the mortgage is paid up or almost paid off, and many routine payments such as loans have disappeared. As a retiree, you no longer need to protect your income for future obligations. Plus, you've had years to accumulate wealth through savings and investments. At this point, your need for life insurance has reduced dramatically and you have cash to see you through your retirement years.

What it all comes down to is that most people want to accumulate money for a secure retirement and life insurance is simply a way to protect your family until then. Of course, individual circumstances may dictate special needs.