Life insurance needs vary at different stages of our lives. What is the best option as you reach retirement age?
Life insurance needs vary at different stages of our lives. When we are just beginning our careers, it makes sense to purchase life insurance to cover financial shortfalls should we die prematurely. On the other hand, it an individual has already funded their children’s education needs, paid off their mortgage and built adequate funds for retirement, their life insurance needs may be negligible. As financial situations change, life insurance needs should be re-evaluated to avoid paying unnecessary costs.
What are some of the reasons why someone would want to maintain life insurance during their retirement? Some of these reasons include:
- To pay income or estate taxes
- To replace or maximize income from a single life pension
- To ensure that children from a previous marriage receive their designated inheritance
- To fund a child’s trust
- To fund a charitable legacy
The Types of Insurance
- Term Life– This type of life insurance provides a predetermined amount of coverage in the event that the insured party dies during the time period in which the policy is in force. For example, if an individual purchases a $1,000,000, 10 year term life insurance, the policy will pay this face amount to the designated beneficiaries if the individual dies during this 10 year period of time.
- Whole Life– This type of life insurance provides a set dollar amount of coverage which cannot be cancelled if fixed, uniform premium payments are paid. The premiums for this type of life insurance are generally higher during the younger years of life as they are levelled over time, so this type of policy is not often recommended for younger families who cannot afford the higher premiums during their accumulation phase.
- Universal Life– With this type of policy, a cash value accumulates over time. And, the policy holder can vary the premiums amount from year to year and the amount of coverage. This type of policy acts as a combination of level term coverage and whole life, but offers added flexibility and the option to build cash value.
- Second to Die– This policy is a relatively new type of insurance. It is a single policy covering two lives, paying out upon the death of the second insured party. This type of life insurance is often used for estate planning purposes.
There is no magic number for how much life insurance each individual should carry. Work with a financial advisor and/or insurance professional to discuss your specific financial goals, needs and personal household budget to determine which type of policy is best for you, and then what amount of coverage is required.
Life insurance retirement plans is is a crucial part of your financial retirement planning. Jim Trippon of Trippon Wealth Management has over 30 years experience in working with America’s wealthiest families in retirement planning. Jim is able to share the secrets of making money and KEEPING it with his retirement planning clients. Honest, practical and sound retirement planning advice is what makes Jim, The Advisor To America’s Millionaires.
Give us a call at 713-661-1040 and let’s start a conversation on how we can put our experience to work for you, TODAY!
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