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Problem is that real life statistics say otherwise.
One of the quickest growing segments of life insurance over the past 5-10 years has been GUL. The majority buying it are age 50-65.
They bought term and invested the difference. Only to find out that they still need life insurance.... just not as much as they used to need... which is a good thing since it is triple the price at that point. It is not uncommon for a 60 year old to spend $6k - $10k per year on a $300k - $400k GUL. And they are the ones requesting the coverage, no "convincing" required.
There is the income replacement needs (loss of SS and/or Pension benefits). Most people do not want their spouse to be forced into downsizing after they pass. And 1 less person does not equal 50% less in expenses.
Then there is the fact that many retirees are buying new or second houses, helping with children or grandchildren (from living expenses to college expenses to healthcare expenses), financing new boats/cars/toys, and even starting new businesses. LTCI care for parents and themselves is a huge hit for many too.
Then there are the surviving children to think of. Do they have funds set aside to cover probate expenses and immediate final expenses? Are the assets set up so that the kids have immediate access to sufficient money to cover all of that? Are they in assets that will make sense from a tax and economic standpoint to dip into?
Then there is just being smart about money. With life insurance, a 50y old could pay for $100,000 in final expenses with about $25k in assets. Which leaves his wife or kids with an extra $75k of his hard earned money.
Financially savvy people who want to maximize what they leave their loved ones with, utilize life insurance to pay for a large expense with a small amount of money.
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15% retirement savings rate is not realistic for middle class families. The average deferral rate for the middle class is around 4%. Most can afford to double that... but very few can afford to triple that if they have children.
So his "solution" starts out with unrealistic assumptions for the majority of people he is speaking to. They are not saving 15% of their income per year and most likely never will be.
The average middle class family will need every bit of their SS/Pension/Savings to create the income needed for retirement. Most are shocked that $1mm only gives them $40k per year in retirement income.
That means most middle class surviving spouses will suffer a drop in income when the other dies (due to SS and any possible pension). Most people, once in that position, see that scenario as undesirable.
The average middle class family does not need the majority of their life insurance in WL or UL. But they would benefit greatly by having a small portion in it. Active life agents speak to countless 55-65 year olds who wish they had bought a small WL or UL when they were young (because it would be a large WL/UL now when they are old).
It is all situation specific. But the majority of people age 60-65 these days still see a need for life insurance. The % that still see a need for it is only growing. Younger generations should take notice of the actual real life statistics and not some fantasy scenario that is not holding true for the majority of americans.
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