Raymond Caucci, Life Happens
Once you hit 65 and retire, you don’t need life insurance, right? Not so fast!
The traditional thinking about life insurance is that you only need it when you have an income to protect, when you have a mortgage or when you have kids to support.
And while it’s true that having life insurance after 65 isn’t right for everyone, there are some good reasons you might want to consider it.
1. Supplement your retirement income. If you have an existing permanent life insurance policy, for example, you may be able to tap into accumulated cash value as a form of retirement income. You can incorporate the funds inside your permanent life insurance policy to complement other forms of retirement income such as Social Security, 401(k) plans and IRAs.
Drawing on the cash value of a permanent life insurance policy enables people to use other resources to guarantee lifetime income.
There also comes a point when people become concerned about outliving their retirement savings. Drawing on the cash value of a permanent life insurance policy enables people to use other resources to guarantee lifetime income, such as a longevity annuity or a guaranteed living benefit.
2. Transfer wealth. Life insurance can be an effective vehicle for transferring wealth to your heirs while avoiding inheritance taxes. While the federal exemption for estate taxes have been raised to $5.43 million for 2015, there are still state inheritance taxes to consider. There are several states where you wouldn’t want to be caught dead, from an estate-planning perspective.
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