Dear Dave: My boyfriend is wondering if he should buy life insurance for his mom and dad. They’re both in their 70s, and they’re no longer married to each other. His mom is disabled and remarried, and she doesn’t have any life insurance coverage. The only coverage his dad may have would be through his employer. He’s afraid he would have to pay funeral expenses if one of them died, and he’s not in good enough shape financially to do that right now. What’s your advice?
Dear Cherie: If the only insurance his dad may have is furnished through his employer, then yeah, when he stops working he probably won’t have life insurance anymore. It would be fine if he wanted to buy them each a small policy, but it’s going to be very expensive at their age. He would have to get them to sign off on it, and they’d also have to be healthy enough to have a policy issued.
This isn’t a good long-term plan, however. As a long-term plan, I’d tell your boyfriend that he needs to build up his own wealth. If he had $15,000 to $20,000 in savings, that’s more than enough to bury two people. I don’t mean to sound insensitive, but we’re talking about the economics involved in this kind of situation. You can have a nice funeral for as little as $5,000.
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The other thing I’d do if I were him is I’d have a discussion with mom as to whether or not the stepfather has the funds to handle this sort of thing. When it comes right down to it that would be his responsibility, not the son’s. Then, he should have a similar discussion with his dad. If his dad’s got insurance through work, and the stepdad is ready to pay for his mom’s burial, then I wouldn’t buy insurance on them. They’re covered for the immediate future.
So I wouldn’t do it unless they absolutely don’t have this sort of thing covered. Even then I’d prefer you just cover it with cash, because all we’re talking about is just enough to cover burial costs. Nothing needs to be elaborate.
Dear Dave: My wife and I are in Baby Step 2 of your plan, and we’ve got our 20th wedding anniversary coming up. We had always planned on taking a 10-day luxury trip to celebrate, but now that we’re trying to get out of debt it seems pretty unrealistic. Should we pause the Baby Steps and celebrate like we originally planned, or would it be better to concentrate on paying off debt?
Dear Don: If it were me, I’d want to pause and celebrate in a smaller way. Then, in a year or two when you’ve reached your goal of being debt-free, you could have a big double celebration — for your anniversary and for gaining control of your finances.
Think about it. Why isn’t the 21st, 22nd or 23rd anniversary just as big as the 20th? No reason really. It’s just an arbitrary milestone we as human beings decided on and created. But you can “undecide” stuff like that anytime you want.
If you two, as a couple, are in agreement on that point, then it suddenly becomes easier to delay pleasure in order to win. And trust me, when you agree on things like that, the celebrations become even sweeter!
Dave’s latest project, EveryDollar, provides a free online budget tool. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.