By Darrell Bryant
Life insurance is a frequently overlooked component of retirement planning. Why isn’t the topic more prominent in financial planning conversations? Some people may already have life insurance in place and think that the policy they set up years ago still meets their needs. Others have life insurance provided through their employer and don’t consider that when they stop working, the life insurance policy goes away.
There’s also a myth that life insurance is for younger people, those who have kids still at home or need to replace income during their primary earning years. Historically, the prevailing advice in the industry has been to eschew permanent insurance in favor of term and invest the difference – then let the life insurance go when the kids are grown and the house is paid off.
Sure, your need for life insurance is probably different at age 65 than it is at 35. But we believe that your need doesn’t necessarily change over the years – your why and how much does. Here are a few things to consider as you evaluate your potential need for life insurance in your later years.
Do you have a potential need to replace a spouse’s income?
When we help you create a plan for your future, we do so with the assumption that everything will go to plan. And if you’re married, one of those assumptions is that both of you will live a long life – and you’ll enjoy Social Security benefits and income from retirement accounts for two people.
But as we all know, life hardly ever goes as planned. When one spouse dies, you could lose income from a pension, an annuity, Social Security, or a part-time or full-time job. In 2020, the average Social Security benefit for retirees was $1,503 per month or $18,036 per year. That’s a significant loss of income and could mean that the surviving spouse has to make dramatic changes to his or her lifestyle if the funds don’t come from another source.
Does your existing policy still work for you?
The life insurance industry has changed dramatically over the past decade, with companies offering innovative new products with exciting benefits. For example, say you’re a healthy 65-year-old with no serious health history. You could purchase a life insurance policy that offers a chronic care rider, which would provide for your long-term care if you need it.
Many newer policies also offer Accelerated Death Benefits, providing funds for medical expenses before your death. These features allow you to reap the benefits of life insurance both during your lifetime and after your death, and you much more value than you paid in premiums.
Do you want to leave something to people or groups you care about?
Most of the people we work with want to take care of their loved ones when they die. What they don’t want to do, however, is saddle them with an unwelcome tax bill resulting from that inheritance. Life insurance can allow you to pass money to the next generation efficiently and effectively, creating the type of legacy you’ve envisioned.
While it’s not a fun topic – who wants to talk about what happens when they die? – life insurance is still a critical part of your retirement planning. Want to find out more about how to put life insurance to work for you?
Give us a call at (402)932-2141 or email firstname.lastname@example.org to schedule your complimentary consultation today!
Darrell Bryant, CFS®, CAS® is Omaha’s Retirement Strategist. As the founder of D. Bryant Retirement Strategies, he focuses on helping individuals and couples nearing retirement do so successfully. Along with more than 30 years of experience, he received the Certified Fund Specialist (CFS®) designation and a Certified Annuity Specialist (CAS®) designation from the Institute of Business & Finance. Passionate about helping as many people as possible in his community, he hosts Retirement Strategies Radio, heard Saturday mornings at 7:00 a.m. on 1110 KFAB. He has also written articles on financial planning that have been featured on Fortune.com, FoxBusiness.com, Money.com, and in the Midland Business Journal. To learn more, visit his blog, his website, or connect with him on LinkedIn.