Life Insurance After Retirement
For most people, the need for life insurance ends at retirement. If life goes according to plan, by the time you retire your children will be self-sufficient, your home will be paid off, you will have a retirement nest egg saved and you will be able to collect social security. Unfortunately, life doesn’t always go according to plan. Circumstances could change which would make owning life insurance after retirement a smart move. Here are some scenarios where owning life insurance after retirement might make sense as well as some coverage options.
When You Might Need Life Insurance After Retirement
You are Semiretired –You might choose to work part-time or do some consulting work for a certain number of years after you retire. If you wanted to replace this income in the event you passed away, it mike make sense to purchase a small term policy. If you are in very good health, a 10 year term policy for a 65 year old male nonsmoker costs less than $110.00 per month for $200,000 of coverage.
You Still Have Debts – You might find yourself in a position where you retired while still having a small mortgage balance or other intermediate term debt. It might make sense to purchase a small term policy that matches the amount and duration of your existing debts.
You Want to Leave an Inheritance to Children or Grandchildren – You might want to earmark a specific amount to your children or grandchildren separate from your home and bank accounts. You could really use any type of permanent life insurance to accomplish this depending on your overall goals.
You Want to Cover Final Expenses – You might want to address your final expenses with life insurance planning. You can use a fully underwritten permanent policy or a final expense policy depending on how much you would like to set aside to handle your final expenses.
You Have a Special Needs Child – If you have a special needs child, you will want to make sure that they have the proper care they need after you are gone. By utilizing a special needs trust, you can pass a life insurance death benefit to your child without impacting any government assistance they might be receiving. A survivorship policy works well in this case as it will provide the death benefit once the surviving parent has passed away.
You Want to Leave a Charitable Gift – Life insurance can be an excellent tool for charitable giving. You could use life insurance to leave your favorite charity a bequest upon your death with a potential tax deduction to your estate. Guaranteed universal life insurance can offer an affordable option for charitable giving.
You Have Amassed a Large Estate – Life insurance can be an excellent estate planning tool if used properly. If you have amassed a large estate that will be the subject of estate taxes in the future, you could use an irrevocable life insurance trust (ILIT) to give your heirs the funds needed to pay estate taxes. By properly utilizing an ILIT, the death benefit from your life insurance policy will not be included in the value of your estate. Survivorship policies work well in this scenario.
Your Life Insurance Coverage Options After Retirement
Term Life – Term life is an inexpensive and simple product. It provides a guaranteed level premium and death benefit for a specific period of time. If you find that you still need life insurance after retirement for only a short period, a term policy is the best option.
Guaranteed Universal Life – Guaranteed universal life is an excellent option if you are focused solely on a guaranteed premium and death benefit for your entire life. A Guaranteed universal life policy is not designed to accumulate cash like a whole life policy or traditional universal life policy so premiums are lower. A guaranteed universal life policy might offer an affordable solution to cover final expenses and leave additional funds to children or other beneficiaries.
Survivorship Universal Life – Survivorship universal life (SUL) is also known as a second to die policy. This policy covers two people and provides a death benefit only after the second person has passed away. An SUL policy can be less expensive than purchasing two individual policies. Survivorship universal life is a good choice for estate planning purposes. It can be used to provide heirs the liquidity needed to pay estate taxes due after the surviving spouse has passed away. It is also a good choice to provide funds to care for a special needs child after the surviving parent has passed.
Whole Life – Whole life insurance offers guaranteed level premiums, cash value and death benefit protection. It is the most expensive option out there in terms of traditional permanent coverage because of all of the guarantees that it provides. A small whole life policy might be a good choice to provide final expense coverage with the option to access cash value in the future.
Universal Life Insurance – Universal life insurance differs from guaranteed universal life insurance in that there is an investment component to the policy. Premiums for traditional universal life are higher than GUL but are designed to build cash value over time. If you are looking for coverage that has the potential to build cash value that you can borrow from in the future, universal life might be a good fit.
Final Expense Insurance – Final expense insurance is normally used to cover funeral costs and not much more. The coverage amounts for final expense insurance can range anywhere from a $2,000 dollars up to $50,000. There are several final expense options from fully underwritten policies with a level death benefit to guaranteed issue policies with graded death benefits. If you are simply looking to cover funeral expenses and not any other major debts, you can always consider final a final expense policy.
Life Insurance with Long Term Care Coverage
There are several companies out there that allow you to add a long term care rider to your life insurance policy. This rider allows you to use a certain percentage of your death benefit for qualified long term care expenses. Although adding a long term care rider to your life insurance policy could give you an added layer of protection, it is important to note that long term care riders come at an additional cost and the terms of coverage differ with each company.
Buying Life Insurance After Retirement
Believe it or not, if you are in good health, life insurance rates after retirement are more affordable than you think especially when you consider that most people who need life insurance after retirement usually don’t require a substantial amount. If are interested in life insurance after retirement, it is important to shop your coverage. Many companies out there offer separate underwriting guidelines for older applicants that are more liberal when it comes to build, cholesterol levels and blood pressure level. We know which companies view older applicants more favorably than others. We will shop your case to over 40 life insurance companies to find you the best rate. If you are retired and need life insurance, give us a call at 888-67-87-9444 or email us at info@archstoneagency.com.
About Us
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com.
