Every stage of life has unique financial planning and insurance needs and the retirement years are no different. If you still carry the same life insurance coverage as you had twenty years earlier, your range is probably not well suited to your age. Likewise, dropping all life insurance coverage is not a wise move either. Though you may not need as much coverage at this stage, life insurance is still essential to a sound financial plan.
A few reasons why you still need life insurance are:
1. Funeral Expenses – According to the National Funeral Directors Association, the average funeral, including the vault and casket, but not cemetery costs or a tombstone, is $6500.00. This can quickly rise to a much higher amount, which could burden your surviving loved ones. Paying for the costs associated with death is a crucial role of life insurance.
2. Healthcare Expenses – Should you incur hefty healthcare costs before you pass on, life insurance can help pay these bills, so they don’t get passed on to your loved ones.
3. Estate Taxes – Depending on the size of your estate, your heirs could be responsible for paying estate taxes at a rate of 37 percent or higher. Life insurance can cover substantial estate taxes and secure more of your hard-earned estate for the next generation. Furthermore, proceeds from your life insurance policy are likely more readily available than your other assets.
4. Caring for Dependents – Life insurance can help a surviving spouse enjoy a comparable lifestyle, especially if they will not receive your retirement income, pension, or social security benefits.
5. Charity – Some people create a life insurance policy to benefit a not-for-profit organization. Before you do this, however, make sure the organization has obtained 501 (c) (3) not-for-profit status and that they will accept your policy. Some organizations are not equipped to go through the necessary processing to handle these types of donations; others can do so only if the procedure is structured in a specific way. You can deduct the cost of premiums from your taxes if you name the charity as both beneficiary and owner.
There are countless other reasons to continue carrying life insurance in retirement. Brian Gruss can help you calculate what type and level of life insurance coverage will best serve your needs.