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Do I Need Life Insurance After I Retire?

While the reasons for purchasing life insurance in your 20s, 30s, and 40s can no longer matter after you retire, don't void a current policy or assume that life insurance will no longer meet your financial goals; you will still need life insurance once you retire.

Protect your loved ones against financial hardship

One of the key benefits of life insurance for individuals in their working years is to provide money to cover the lack of revenue that will arise if the policyholder dies prematurely. The explanation may no longer be valid until you retire. However, collecting life insurance death benefit proceeds can benefit your partner, dependents, or other loved ones whether the proceeds will alleviate or avoid financial hardship.

Today, an increasing number of seniors are financially helping adult children and/or small grandchildren. If this is the case with your home, life insurance may be a good way to financially cover your loved ones in the event of your death, as it might be able to compensate for any lost pension revenue.

Many seniors continue to work part-time to supplement their salaries. If you've retired from your primary occupation but are now employed part-time or are semi-retired, life insurance may be able to help cover your salary.

Provide funds to pay debts, final expenses and taxes

Life insurance is also common with seniors because it addresses the very real issue of being able to cover all of the costs associated with death. Insurance does not bear any of the costs of a recent disease. Similarly, certain costs are also grouped together as final charges, such as the cost of a casket or urn, a funeral or memorial service, cremation or conventional burial, and so on. If the estate may be administered by probate court, life insurance will be able to help pay court filing costs and attorneys' fees.

The proceeds from life insurance premiums are mostly tax-free for the people listed on the policy. So, after you die, the entire value of the insurance will be used to pay off all unpaid obligations, such as mortgages, car loans, credit card debt, debts owing to family members or relatives, and so on.

If you expect to owe some state or federal income or inheritance taxes following your death, life insurance death premiums are a ready pool of cash.

Incorporate life insurance into your estate planning strategies

Estate preparation, or the practice of preparing for the care and disposition of one's assets after death and during times of incapacity during one's lifetime, is something that citizens of all ages can do. Life insurance is often used in the estate plans of retirees as a way of creating equity for future families, caring for children from past marriages and also providing for a present partner, and creating liquidity to cover estate tax commitments following death.

Although the insurance agent cannot provide legal advice or assist you with drafting estate planning paperwork, he or she will explain how life insurance works into a larger estate planning scheme and recommend different product styles and compensation choices to help you achieve your objectives.

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