It may seem like a no-brainer to let your life insurance expire or take it out after you retire. After all, the main purpose of life insurance is to protect your family from losing your income should something happen to you. Actually, life insurance is good for more than just reimbursing your income at your death. After a closer look, you can decide to continue to carry life insurance after retirement.
Reasons to have life insurance after retirement
A life insurance can play a role in your retirement and property planning in several ways.
Repayment of debts
Many retire with significant debt. If you have debts, repayment will be your estate's liability after your death. A life insurance policy can help ensure that your family is not overwhelmed by large debts.
If you want to leave money to your heirs, a life insurance policy is a good way to do it. Just name these heirs as your beneficiaries. They will receive death benefits from the insurance company tax free after your death without having to go through a will. As long as you pay your premiums on time, the life insurance company can not cancel your insurance and the death benefits for your heirs are guaranteed.
Permanent life insurance policies build up cash value over time. If you bought a permanent insurance well in advance of retirement, you may be able to withdraw money on it. Be aware that deducting the cash value of your life insurance reduces your death.
Accelerated Death Benefits
A permanent life insurance policy with an accelerated death benefit allows you to access the funds before death in certain circumstances, such as needing a nursing home or being diagnosed with a fatal disease that requires extreme medical treatment intervention. This can help offset medical costs or long-term care costs if these situations arise.
Compensation of pension income
You may be entitled to a pension or some form of pension income that belongs to you alone, not your spouse. Buying life insurance is a way to reimburse that income for your spouse if you die first.
Paying Property Tax
If you expect your heirs to pay property tax, it may make sense to keep your life insurance. Your heirs can use the death benefits to pay the tax.
Maintenance for non-self-supporting family members
If your spouse's financial situation were to be significantly affected by your death, it is probably a good idea to have life insurance. Death benefits can help fill the gap left by lost income. The same applies if you have a child with special needs who is financially dependent on you.
A life insurance policy can act as a vehicle planning vehicle, a source of cash or to cover long-term care or medical expenses in certain situations. If you have questions about life insurance, our knowledgeable agent will be happy to help you.