The Uses of Life Insurance When You Retire
Do you need life insurance when you retire?
Life insurance needs in retirement are similar to those who are in their working years. Life insurance is a tool to replace the loss of income. If you are in retirement and someone depends on an income you may want to consider life insurance.
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For example, in Social Security retirement planning, life insurance is a tool that can give a recipient peace of mind knowing if they decide to wait until age 70 in order to maximize their Social Security delayed credits, the life insurance company will provide their heirs with the lost income if they do not live long enough to break-even.
Another use of life insurance in retirement involves the survivorship benefits of a pension. If you have a pension, you will notice that the lifetime income amount on your life only is higher than the income you will receive if you wish to leave your spouse a benefit in the event you pass away first. The difference in those two incomes is a life insurance policy that the pension carries. Before you retire, you may not have realized you have the choice of purchasing the life insurance plan the pension offers (where the pension company keeps the proceeds regardless of which spouse passes away first) or buying your own permanent life insurance plan which creates an asset that can be used to create an estate, used for long-term care needs in the future or even sold to a life settlement company.
Other reasons to own life insurance in retirement
Life insurance is a contract where the death benefit passes to beneficiaries efficiently. These benefits pass on to named beneficiaries without going through probate and are provided to them income tax free. In addition, permanent life insurance contracts such as whole life and universal ensure that funding goals are accomplished regardless of how long a person lives. If an insured individual lives one day or 50 years, life insurance’s guaranteed death benefit provides a stated amount of money to ensure long-term estate planning goals are met.
Lastly, some retirees buy life insurance to cover final expenses.
Isn’t Life Insurance Too Expensive When Someone is Older?
Purchasing life insurance at or near retirement requires more premium than when purchasing this coverage at a younger age. Therefore, the correct way to judge if owning life insurance when you retire is the right strategy for you is to compare it to your other alternatives in order to see if it can help you accomplish your goals more efficiently.
Because buying life insurance in retirement almost always involves the purchase of a permanent life insurance policy with a significant financial commitment, Decision Tree Financial you fully understand what your alternative options are to accomplish your goals, how you will fund the policy during your retirement and what you can do in the future if the policy no longer is needed.
This can best be accomplished by participating in our Wealth Performance and Protection System where we look at all aspects of your finances and give you a clear understanding of how to reach your financial goals and be confident you will have a secure retirement.