Life insurance is something that is often times not kept during retirement years.   With the opportunity to presumably self insure at that point, many people will drop their term or let it expire.   While this is a strategy of many, it is not always the best one to pursue.   You may assume you don’t need or want life insurance after retirement, but how do you truly know how you will feel when you reach that age.

We speak to clients everyday that are looking to qualify for coverage that are 60 years old and over.   They consistently say that they wish they had bought when they were younger or planned for some coverage into retirement.  With that being said, it is certainly very possible to still qualify for coverage and the premiums will be determined by health.  Premiums have become more and more affordable due to life expectancy increasing.

The amount of coverage and reason for coverage may be totally different than when the client was 35.  At 35, they might have had a primary focus of replacing income if a premature death occurred.   At 65, income replacement might be less important and it might be about estate planning, mortgage protection, and final expenses.    When you are looking at your financial plan it is important to consider changing items of importance in your life.   It is always a good idea to look at your plan every year or two, to make sure nothing has changed.  If something has changed it may be something to address, or it may simply be something to keep in mind going forward.

A lot of our clients will by life insurance based upon a single need.  For example, they might want it to serve as mortgage protection for their primary mortgage.  We worked with a client the other day who had a mortgage for 275,000 and wanted to have that paid off so her family would have the house free and clear with no payment.

Other single needs that we see clients by life insurance for:

Income replacement- replacing all or part of their income for their family.

Final expenses- To cover all of the immediate needs of the burial.

College education- Insurance to pay for the childrens education

Mortgage protection- To pay off the existing mortgage (s) so the family is not buried in debt

Tax Favorable Accumulation- The use of the cash value for tax favorable accumulation

Business loan- When a client is applying for a business loan and the bank requires life insurance in the amount of the loan

Buy-Sell- Life insurance on partners in a business that will buy out a partner due to their untimely death

Key Man life insurance- Taking out a life insurance policy on a key person in the business to help replace the value of  that person to the business.

There are other single needs that people will buy insurance for.  We try to have our clients avoid focusing on a single need and look at their overall picture and needs.  With that being said, life insurance is a very effective way to cover a single need and create leverage.

Most CFP’s, (Certified Financial Planners) believe that life insurance should be the first item on your agenda when packaging together a sound financial plan.  Life Insurance should be considered to help with the following list of critical issues.  Have you reviewed your life insurance policy?  Are your beneficiaries set up correctly?  Do you have enough insurance for your family?  What are the tax implications with your life insurance plan?

1.  Income replacement for your family

Does your family depend on  your income?  If so, life insurance can replace that income for them when you have a life event.  Do you have young children?  What would happen if they didn’t have your income anymore?  There are many ways to look at one situation.  Whether you are looking for protection for your family, spouse, or children, be sure to secure enough life insurance for their future needs.

2.  Final expenses

In some instances Life insurance can pay your funeral and burial costs.  (FINAL EXPENSES) If you are not planning for your family regarding income replacement, then you might want to just get a basic policy that will help with basic life burial costs, or other costs that your health insurance do not cover.  You can most likely buy a small policy with $10,000 – $20,000 of coverage for a nominal premium.  You then will not place the burden on your family for these costs. 

3.  Create a LEGACY for your heirs

Some families retain wealth over decades because they know what the value in wealth transfer.  With the tax advantages life insurance offers, it is silly not to use it.  Do you have  other assets to pass to your heirs?  That is great if you do… Make sure your assets aren’t to big or you will most likely need to buy life insurane to make up for your estate taxes.   You can create an inheritance by buying a life insurance policy and naming them as beneficiaries.

Here are ust a few reasons why you should buy life insurance.  No matter what your current financial situation is.  Be sure to consult your life insurance planner to get set up with the life plan that makes sense for your situation.