You’ve probably carried life insurance the majority of your life, and now it’s time to decide if you need it moving forward. Deciding if you need a retirement insurance option can be confusing, but it doesn’t have to be.
The purpose of life insurance is to protect you or your family from financial loss or burden if you were to pass away. Many people purchase just enough life insurance to settle their final expenses and burial costs, but that may not be enough.
There are many reasons you may want to consider keeping or purchasing a new retirement insurance policy. Whether you have dependents or you still carry debt, getting additional coverage may be beneficial.
If you are unsure if you need life insurance heading into retirement, here are a few things you should consider before purchasing a policy:
Quick Article Guide:
- What to Consider
- How to Find the Right Insurance Option
- The Importance of Life Insurance in Your Retirement Plan
Ideally, you want to be debt-free heading into retirement. However, this may not always be the case. According to a recent Comet survey, 80.9% of baby boomers are in debt. This means that many Americans may be retiring with some form of debt.
If you plan to still make debt payments into retirement, it may be a good idea to keep your life insurance policy or find one that best suits your needs. You don’t want your family members to be responsible for this financial burden.
You’re Still Working
If you plan on working in retirement to supplement your income, exploring retirement insurance options may be a necessity. For example, if your dependents rely on the additional income for your support, you may want to purchase coverage to fill in the gap.
If you plan to live off Social Security and your retirement savings once you retire, you may not need coverage to replace your income. Your loved ones will continue to receive survivor benefits after your passing. Keep in mind, survivor benefits may be a lower amount than what they were receiving before your passing.
You Have a Disabled Child
If your children are self-sufficient and do not rely on your income, you may not need to continue your coverage. On the other hand, if you have a disabled child that still lives at home or other dependents that rely on your source of income, then you should keep your coverage.
Additionally, if your spouse or significant other would suffer financial hardship if they lost your pension benefits or other monthly income, purchasing some form of retirement insurance would be beneficial.
You Would Like to Use Life Insurance as an Investment
There is a lot of hype around using life insurance as an investment such as an Indexed Universal Life policy, or an IUL. Insurance agents may make this policy sound enticing by using skewed claims. But this insurance policy may be more for a very specific demographic.
If you’re curious about purchasing life insurance as an investment, make sure to seek expert advice prior to purchasing a policy.
You Want to Leave a Legacy Behind to Your Family or a Charity
Even if you’re financially secure, you may want to leave a legacy behind to your family or a charity you’re passionate about. You may also want to leave some funds for your grandchildren to pay for education expenses or to purchase their first home.
Leaving a legacy behind could be greatly appreciated by your loved ones.
Now that you understand why you may need to continue life insurance coverage well into retirement, you need to determine the best policy. Even if you have carried life insurance your entire life, you may need a different policy heading into retirement. Your financial needs may have changed, and your policy may no longer suit you.
To help you understand your retirement insurance options, here are the most common policies:
Term Life Insurance
Upon evaluation of your insurance needs, you may determine that you will only need life insurance for a portion of your retirement years. Term life insurance can be purchased for a certain amount of time. Most term life insurance companies offer 5, 10, 15, 20 or 25-year policies.
Some agencies offer coverage for 10 to 35 times your earned income before taxes. Since this policy only covers a portion of your life, it’s generally less expensive. This makes term life insurance more attractive to consumers.
Term life insurance was designed to protect your income until retirement. But if you have outstanding debt, this may be a good solution.
Permanent Life Insurance
You often hear permanent life insurance referred to as whole life insurance. This type of policy usually has a fixed premium, a death benefit, and a cash value. However, the cash value may be very minimal, if any.
Keep in mind that most of these policies don’t offer coverage past age 80 and may only offer up to $50,000. Since this insurance policy is generally offered with very few medical questions, it can be very pricey.
Universal life is another permanent life insurance policy with a cash value. However, this plan may provide more flexibility with your death benefit and premiums.
One advantage of a universal life policy is that there is a minimum amount of a premium payment in order to keep your policy active. Meaning that if you need to skip a payment during the year, your policy can still remain active as long as you make the full payment by the end of the year.
A variable life policy also has a cash value option. This policy allows the policyholder to put the cash value into an investment account. This account will be managed by the life insurance company.
In the chance your investment does well, you can use your gains to pay part of your premium or increase your death benefit. On the other hand, if your investment doesn’t go well, your death benefit may decrease. It’s important to note, most policies don’t have a guaranteed minimum.
You may not want to take a chance with your retirement savings on this type of life insurance.
Variable Universal Life
If you’re looking for the best of both worlds, variable universal life insurance has got you covered. This policy offers the flexibility of payments and an investment option. The downside to this policy is it can be extremely complicated and complex.
Retirement is supposed to be relaxing, you may not want to add a confusing life insurance policy to the mix. Working with an insurance agency can help you weigh out the pros and cons and find the best policy for your needs.
Life insurance is often a forgotten component of a retirement plan. You have worked hard for years and saved well – you want to make sure your loved ones are taken care of. Along with planning for important milestones, you want to have elements of protection in case of emergencies.
So, while you plan for your future and save for retirement, consider your retirement insurance needs. This will help set you up for a better tomorrow.
At JRC Insurance Group, we work with more than 45 top-rated life insurance companies to make sure we always match our clients with the best option available.
To obtain a free quote, or to learn more about your options for affordable life insurance, please give us a call today toll-free at 855-247-9555 or request a free instant quote online below.
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