I get calls from children and grandchildren on a fairly frequent basis asking about getting a policy to help with the final expenses of their relative. There seems to be a tendency to start thinking about that when it becomes obvious that mom or dad isn’t going to live a whole lot longer.

Even with new mortality tables showing that people who make it through their 60’s in good health have a better than average chance of making it into their late 80’s, there is a point at which life insurance premiums start dramatically depicting how long mortality tables suggest a person might live.

I believe there is a point, and I counsel people on this subject, where they are better off setting the money aside rather than attempting to purchase life insurance. I recently spoke with the daughter of a woman who wanted to take out a $25,000 policy. At her age and health the premium was going to be $4300 per year. So, in less than six years the death benefit would be paid for. In my mind, it’s time to question if that is a prudent use of the money.

Now, if someone has some inside information that mom or grandma isn’t going to make it very long, let’s say three years, would it be a good buy then? The truth is that if someone is medically not expecting to live more than a few more years, they are generally uninsurable. The other end of the spectrum is what I try to point out and talk about the things not everyone wants to hear.

What happens if mom just keeps on ticking? As a child, how are you going to feel about your decision when your parent is $30,000 into a $25,000 policy? Is it going to be time to cut your losses by dropping the policy? Is mom’s mortality going to become a sore point? And yes, for the greedy child who thought there might be some profit in buying that insurance, is there a time when mom’s longevity stands between you and recouping some of your money?

Bottom line. Life insurance has to make sense. Especially with older people it’s important that everyone be realistic about what final expenses will really cost. Is it better to buy life insurance or just plan on everyone chipping in? You can always get the insurance somewhere, but if you call me, expect to get some reality check questions before we get too far into serious insurance discussions.