The reasons for buying life insurance in your 20s, 30s, 40s and 50s may no longer apply after you retire. However, don’t be too quick to cancel an existing insurance policy or to assume there’s no need for you to consider purchasing coverage as a retiree; you may still need life insurance after you retire.
When people in their earning years purchase life insurance, one of the main purposes is to provide funds to replace the loss of income that would occur if the policyholder died prematurely. When you are retired, that reason may no longer apply. But, your spouse, dependents or other loved ones may still benefit from receiving life insurance death benefit proceeds if those proceeds can ease or prevent a financial hardship. More and more retirees today are supporting adult children and/or minor grandchildren financially. If that’s the case in your household, life insurance can be an invaluable way to financially protect your loved ones when you die, and could make up for the loss of any pension income that wouldn’t continue after your death.
Many retirees are still working in some capacity to earn some extra income. If you retired from your main career but have now started working a part-time job, or if you are semi-retired, life insurance could help protect your income.
Life insurance is also popular for retirees because it offers a solution to the very real problem of being able to afford to pay all of the expenses that come with dying. The expenses of a last illness may not be fully covered by insurance. Similarly, there are numerous costs that often get lumped into the final expenses category, including costs of a casket or urn, funeral or memorial service, cremation or traditional burial, etc. If your estate has to go through probate court to be administered, life insurance could also help cover court filing fees and attorneys’ fees. An example policy for final expense/funeral expense is Mutual of Omaha’s Living Promise (click for brochure).
The proceeds from life insurance policies are generally income-tax free to your named beneficiaries. So, the full amount of your policy could be used to pay off any outstanding debt when you die, including mortgage loans, car loans, credit card debt, debts owed to family members or friends, etc.
Life insurance death benefits also offer a ready source of cash that can be used to pay any state and/or federal income or estate taxes, if you anticipate a tax obligation after your death.
Estate planning, the process of planning for the management and distribution of your wealth at your death and during periods of lifetime incapacity, is something people of any age should do. Retirees often include life insurance in their estate plans as a means to create wealth for future generations, to provide for children from previous relationships while still providing for a current spouse, and to create liquidity to be used to satisfy estate tax obligations after death.
While your insurance agent cannot provide legal advice, or help you craft your estate planning documents, he or she can help you understand how life insurance fits into an overall estate planning strategy and can suggest various policy types and coverage options designed to help you meet your goals.
No matter what stage of life you are in, it helps to have a trusted, knowledgeable insurance partner in your corner. The independent insurance agents at Symmetry Financial Group can help you evaluate your life insurance needs, and will help tailor coverage to meet those needs. To learn more, contact us online today or call 843-732-8732.