Why Life Insurance Matters For Families

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Is Retirement Too Late For A Life Insurance Purchase Or Change?

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For one reason or other, you've entered retirement with no or little life insurance. Instead of leaving behind money to your family, you are now afraid you will leave debt. Fortunately, you have not entirely missed the boat. You can still acquire some financial protection for your family.

Insurance Types

After retirement, your choices for term insurance may be limited. For instance, some companies will only sell someone over sixty a shorter term, perhaps ten or twenty years. You may also be able to purchase a whole life or universal life policy. The older you get, of course, the higher your premiums are. For instance, a $500,000 whole life policy for a 50-year-old would cost approximately $13,940 each year. The cost for a 60-year-old would be about $10,000 more annually. Term life premiums are less expensive but will still be a significant investment if the policy is for hundreds of thousands of dollars.

Cancel or Keep

In the past, many people felt that they could let their life insurance lapse after retirement because their house was paid off and they had enough savings and income to pay for their needs and burial expenses. People are living longer, so the amount of money they have saved may not last until they die. Wages have not kept up with the cost of living, as well, so seniors may still have a mortgage payment. If one spouse or partner dies without proper coverage, the remaining spouse may lose everything. Also, life insurance often means that you can leave your children something, even if your savings are depleted. 

Transfer

If you do have a life insurance policy, you can still make changes to it after you retire by using a Section 1035 Exchange. If you have a whole life policy or an annuity, you can replace it with a better policy without having to pay any taxes on the money accrued in your original policy. If your needs have changed, you find a more favorable policy without paying an expensive penalty. Your financial manager can advise you on how best to use this the 1035 exchange.

Life insurance used to be less of a concern to people when they reached retirement, but now it may be necessary even when you are 60, 70, or older. Discuss your needs with your insurance agent or financial advisor so that you can purchase or adjust your coverage appropriately. It's not too late to protect your assets. 


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