Because, at that point, life insurance is basically your children's inheritance. Everything beyond what goes to paying burial costs and remaining debt is your adult children's inheritance. If you don't believe in transferring large inheritances to adult children, then there is no point in paying for life insurance beyond funeral costs.
What the author didn't explain is that life insurance is a way to avoid inheritance tax. Depending on circumstances, it's cheaper to pay an absurd amount of money for an insurance policy, because the payout to the beneficiaries is taxed differently than a straight-forward inheritance, and thus might, after taxes, result in a better payout.
I understand the idea of avoiding inheritance tax, but that has become less of an issue with a $5.45M estate tax exemption. Leaving that aside, my question is why would my kids pay for my life insurance as an investment.
Assume they have paid of their debts, maxed out their 401k and Roth IRA contributions and they have extra money to invest for retirement. If they put it in the stock market they will pay income taxes and any dividends they receive, which they don't have to pay any taxes on life insurance so I see that. But it still seems to me that life insurance is a bet on when I die and if they are not dependent on my income I don't see why they would want to take that bet.
I am 57 and I can get a 20 year term-life insurance for $5k/year with a payout of $250k. If I outlive the policy that is $100k in sunk costs and the next term life policy will be even more expensive.
Whole life makes even less sense at my age. The only way this makes sense to me is that if you had a whole life policy that you started wen your kids were younger and now you are retired and can't afford the payments do you cash it out? Well, if I cash it out then maybe I end up spending it or the nursing home gets it, but if my kids take over the payments then they get the benefit (unless the nursing home still takes it.)
This still assume I bought whole-life 20 years ago which everyone at the time told me was a sucker's bet so I'm still not sure that this makes any sense.
What the author didn't explain is that life insurance is a way to avoid inheritance tax. Depending on circumstances, it's cheaper to pay an absurd amount of money for an insurance policy, because the payout to the beneficiaries is taxed differently than a straight-forward inheritance, and thus might, after taxes, result in a better payout.