If you have a spouse, children, or other loved ones who rely on you for financial support. You probably understand the importance of life insurance. It protects your loved ones and dependents after you pass away. They can use the tax-free benefit to pay bills, support their lifestyle and overcome other challenges.
Life insurance is clearly important when you’re in your career and have dependents in the home, but what about after you retire? Do you still need coverage if your children are grown?
Many retirees would say no. With no dependent children in the house and a substantial amount of retirement assets, surely you don’t need to keep paying those life insurance premiums.
However, life insurance can still be a valuable financial tool in retirement. In fact, you could use it to achieve some big goals and minimize dangerous risks. Below are a few ways in which you can use life insurance in retirement. A financial professional can help you analyze your policies and options, and then decide which strategies will best help you reach your goals.
Life insurance provides financial stability for your surviving spouse.
People are living longer in retirement than they ever have. The Society of Actuaries estimates that a married 65-year-old couple would have a 50 percent chance of at least one spouse living to age 94 and a 25 percent chance of one spouse living to 98.1 That means you or your spouse could potentially live in retirement for more than 30 years.
Longevity is always a good thing, but it can create some challenges. Your savings have to last longer. You also may face high bills for health care and long-term care, especially in the later years of retirement. Those costs could deplete your assets and leave your surviving spouse in a challenging situation.
A permanent life insurance policy can provide a tax-free benefit to your spouse after your death. Your spouse can use those funds to pay outstanding bills and live comfortably during the remaining years of his or her retirement.
You can use life insurance to leave a legacy for your loved ones.
Do you want to leave a legacy for your loved ones or maybe for a favorite charity? There are a number of estate planning tools you can use to accomplish that goal. For example, you can use a trust to provide specific instructions and to guide the distribution of assets.
However, life insurance is also an effective estate planning tool. You can use it to increase the amount you leave to your loved ones. Life insurance also avoids probate, which means your beneficiaries can receive the funds quickly. Your heirs can also use the life insurance death benefit to pay for legal fees and other costs associated with the settlement of your estate.
You may have purchased life insurance to protect your children when they were dependents. Just because they’re grown doesn’t mean they can’t still benefit from your life insurance policy. You can use it to leave a legacy for them or other loved ones after you pass away.
Life insurance can be a source of tax-efficient income in retirement.
Life insurance is primarily about the death benefit, but it can also be a source of supplemental income. Permanent life insurance policies have a cash value account. When you pay your premium, a portion goes toward the cost of insurance, and the remainder goes into your cash value. The cash value then accumulates on a tax-deferred basis.
You have the ability to take tax-free loans from your cash value. That could be helpful in retirement if you ever need supplemental income for emergencies or other unexpected costs. You pay back the loan with your premium over time. Any unpaid balance is deducted from the death benefit after you pass away.
Ready to explore your life insurance options? Let’s talk about it. Contact us today at Arrivus. We can help you review your goals and develop a strategy. Let’s connect soon and start the conversation.
1https://www.fidelity.com/viewpoints/retirement/longevityLicensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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