Can I use Life Insurance for Retirement Income?
Should I use Life Insurance to Fund my Retirement?
What are the Best Uses of Life Insurance during Retirement?
What is the Best Strategy for Using Group Life into the Retirement Years.
Did someone tell you that you should buy life insurance
Life Insurance for Retirement
There are lots of great reasons to use life insurance for retirement. Many better than others. As you near this crucial period of time in your life, the ability to buy a new policy to perform this task is greatly reduced because of your reduced income. You should be judicious with your money in these years.
In this article we answer the simple question: What are the Best Uses of Life Insurance during Retirement.
The Use of Residual Life Insurance during Retirement:
Should you Use a Residual Life Insurance policy when you Retire?
Sure, if you already have a life insurance policy, term or possibly otherwise, it makes great sense to continue the policy when you retire. If the policy is a whole life policy and it is well funded it can make good solid sense. You do need to meet with your financial adviser to determine this. If the policy is a term policy, terrific. Assuming you can afford the term policy there is not much of a reason to cancel it prematurely.
The Use of Whole Life Insurance for Income during Retirement:
Should you Buy Whole Life Insurance for Income during Retirement?
I would strongly caution consumers about buying whole life insurance for retirement income. Yes its possible to accumulate enough cash value in a permanent life insurance policy,however it is pretty difficult to do. It is all but impossible to do within ten to fifteen years of your retirement. Whole life insurance is a terrific product for a variety of reasons, including special needs trusts, and those with significant assets. To set it up as an income producing tool often requires twenty five plus years, and even then it is hard to do.
If you have a whole life insurance policy and it has built up enough reserves, it is indeed possible to use some of the cash value for retirement. Therefore if you are in this exclusive situation, then you may want to consider the matter. However what you take out, might have to go back in. Check with your agent and policy and consider seeing a fee for service financial adviser.
The Use of Term Life Insurance as a Backstop for Pension Income:
Should you use a Term Life Policy as a Backstop for your Pension Income?
Using a term policy as a backstop for your pension is a great idea. Some pensions stop paying out or have greatly reduced benefits if the primary former wager earner dies. A simple term policy can make up this needed income for the surviving spouse. This may just be the best use of term insurance during this important part of your life.
The Use of Term Life Insurance to Make Final Mortgage Payments:
Should you use a Term Life Policy to Make the Final Mortgage Payments?
Having Term Insurance to cover the remainder of your mortgage can make sense, however not always. Depending on where you are on your loan, the value of your home, your income, and other financial considerations this may or may not make sense. If you cannot afford the term policy, I might caution you against doing this.
The Portability of Affordable Group Life Insurance into Retirement:
Should you Port an Affordable Group Life Policy into a Personal Term Policy if it is Affordable during Retirement?
The key part of this question is "affordable." This means that you can afford it within your budget. If you are kindly offered a group life policy to take with you into retirement it may be a deal. Then again, it might not. The devil is in the details. Some lucky executives are offered essentially a free portable term policy when they retire. If this is you - grab it and keep it up to date.
If You Don't Need Life Insurance during Retirement - What Kind of Insurance Do You Need?
Lots! As your wealth and age increase there are all sorts of increased needs for insurance. For many life insurance is just not one of them.
Medicare and Supplemental Medicare:
To begin with Health Insurance when you are retired should be your first consideration. Luckily Medicare should take care of most Americans during this important life stage. Next consider Supplemental Medicare Plans which are "products that help supplement original Medicare." These are not purchased through the federal government but rather private insurers. Not all supplemental plans are needed for all individuals. In general though you should consider all of your options based on your individual health and budget.
Pretty much every American should auto insurance even if you do not drive. Shoot for the highest bodily injury and uninsured motorist coverage that you can afford. Auto insurance actually becomes more important as you age and become wealthier.
Yes, you will need to have a good home insurance policy during your retirement years. Finding the best carrier often depends on where you live and sometimes this is best procured by a local insurance broker. Shoot for a high Coverage A and liability coverage amounts.
As an additional note on home insurance, once you have significantly paid down your home loan it make more sense to consider certain catastrophic forms of homeowners insurance, such as Flood and Earthquake Insurance. These policies are typically excluded from home policies.
Umbrella insurance is excess personal liability insurance that sits over your home and auto and / or other insurance policies. For most Americans once they have a net worth that surpasses about $500K they probably need some form personal umbrella coverage.
Long Term Care Insurance:
The concept of Long Term Care Insurance is that it will pay for long term care should you need to need it. It really is a great coverage. The issue with it, is that it has become so unaffordable and so capricious that the market for this product has soured. In other words there are not that many insurance companies that offer good products. And the few insurers that are offering it have it priced very high.
If you own a business, you may still need business insurance even if you are retired. As a general statement personal auto, homeowners, umbrella, etc does no cover business exposures, however minor. The topic of business insurance is best left up to an insurance agent. Ask them about your exposure. The forms and types of business insurance to consider are many fold and beyond the scope of this article.
There is no complete list of insurance policies that you may need because it really does depend on you and your family. If you own a boat, RV, vacant land, motorcycle, scooter, etc many of these items require their own separate insurance policy. Check with your insurance agent to find out.
Life Insurance Options for Retirement Summation:
Residual Term Insurance.
Whole Life Insurance for Income.
Term Insurance as a pension Backstop.
Term Insurance to Pay off the Mortgage.
Group Portable Term Policy.
Conclusion of Life Insurance for Retirement:
Buying life insurance during and for retirement is more complex than it should be. Often the best option is to pay down all of your debts and live well below your means. However there are good reasons to have the product if it is affordable during these enjoyable years.
Please do not cancel any type of insurance policy without first speaking with a licensed agent or broker in your jurisdiction.
Thanks for reading our article. We hoped our blog answered your questions about this important time in your life. Should you have any questions, please contact us at the email below or add a comment to the box below.
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