Does a retiree with no dependents still need life insurance?

Dear Liz: I am a retired, debt-free veteran, age 68, and I’m struggling with whether to keep paying $25,000 a year for another seven years on an indexed universal life policy. I bought it after taking advice from a local financial adviser who is not a certified financial planner, though he is said to be acting as a fiduciary for me.

I’m single, divorced for about 30 years, and I have no dependents. I receive pensions from the military and the federal government. I also have a broad-based index fund portfolio through a discount brokerage, and in seven years I expect to begin receiving annuity payments from an insurance company for the rest of my life.

It seems to me that I would be better off putting those premiums into the Roth option in my federal Thrift Savings Plan and simply waiting until my required minimum distribution begins in four years. What do you think?

Answer: The phrase “supposedly acting as a fiduciary” is concerning. Advisers are either required to act in your best interests or they are not. Those who are not fiduciaries may recommend products that are expensive or underperforming because they generate higher commissions, not because they are the right choice for the client.

Indexed universal life policies are costly, complicated and often sold to people who do not need permanent insurance. That appears to apply here, since no one depends on you financially. It is difficult to see how spending another $175,000 in premiums would be a wise move.

Still, simply stopping payments could trigger tax and other financial consequences. You should look for a CFP who understands permanent insurance and can review the policy and your alternatives, which may include surrendering or changing it. CFPs are required to act as fiduciaries when they provide financial advice.

You can find fee-only financial planners who work on an hourly or project basis through the Garrett Planning Network. Other resources include the National Association of Personal Financial Advisors and the CFP Board’s consumer site, LetsMakeAPlan.org.

You also won’t be able to add anything to your TSP retirement plan now that you are retired. But you can work with a CFP to identify other ways to invest or use the money you save.

Dear Liz: In all the discussion about the best way to help adult children buy a home, you overlooked the most obvious answer: don’t do it at all. Adults should not expect financial help from their parents.

Answer: That is certainly one viewpoint, but it overlooks the sharp rise in the cost of buying a first home and the value of transferring wealth across generations.

Many younger adults could manage a mortgage payment but still cannot save for a down payment because they are dealing with high rents, rising living expenses and student loan debt. As home prices keep climbing, ownership moves further out of reach. Parental help can let adult children buy sooner, start building equity and potentially accumulate more wealth over time. An early “handout” can make a far greater difference than an inheritance received many years later.

Of course, many parents are not in a financial position to help their adult children. Others do so at the expense of their own finances, or in ways that leave their children dependent on them.

But if parents are willing and able, assistance with a down payment can give their children a significant head start in an increasingly difficult housing market.

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