Needing or not needing life insurance can be a difficult topic because it’s not only a financial decision; it’s an emotional one. It’s hard to separate the money from what requiring life insurance really means to you and your loved ones. To help break this down and make the decision easier, we’re discussing some reasons why you may still want to continue paying for life insurance as you enter your retirement years and no longer have dependents.
Why You Should Consider Life Insurance During Retirement
Many people assume that insurance is only useful when you are younger and have dependents to look after, however there are a variety of other reasons you may want to consider holding on to, or getting a policy, including:
- Final Expenses: We’ve likely all seen the late-night commercials about the need for insurance and the high cost of funerals these days but, while those commercials aren’t always selling the best insurance, they do have a point. Funeral costs, medical bills and legal fees can eat up a significant portion or your estate if there are liquid assets available.
- Debt: Leaving loved ones with debt to pay off is never anyone’s goal. Insurance can be a way to ensure credit cards, mortgages and other amounts can be paid off easily. Alternatively, assets can be sold to pay debt, but cash from insurance will make this far easier and will not require loved ones to sell off property while they’re grieving.
- Estate Taxes: Similar to the debt situation, estate taxes can be shockingly high and become a significant burden on those who are left with your property. When there aren’t enough liquid assets to cover those taxes, the property is likely to be sold and beneficiaries will receive less.
- Donations to a Favorite Charity: Leaving your life insurance policy to a charity not only benefits the charity and helps you feel good, it will also mean less goes to taxes.
- Income for Spouse or Dependents: While most retirement aged persons are unlikely to have an underage child in need of support, there are situations where your income will be needed. Consider what your spouse, children or grandchildren might need upon your passing. If it’s possible to give them adequate support with an insurance policy, this may be a good idea.
- Estate Settlement: Having an influx of cash can be a good way to prevent fighting over assets after a loved one’s passing. Even the best and closest families have succumbed to feuds when money and property are on the line. When an asset can’t be divided, money can be a way to appease the person who is unable to share in the property.
- Keeping Your Business Afloat: If you are a business owner or have a hand in certain operations, an insurance policy might be needed to ensure these dealings can continue.
When Should You Stop Paying for Life Insurance
Generally, life insurance will have a neutral to positive effect on your estate but there are times when the money you pay on a policy could go for more useful things. For instance, if you already have enough in liquid assets to cover your debts, a policy won’t be necessary. The money you would pay on the policy could be used for things you need now, or saved.
If you have whole life insurance, you may also want to consider converting it to term life which is often renewable up to age 85. There is a significant cost difference and this money can then be invested in a mutual fund or something similar. To get more ideas on how to invest this extra cash, read our tips for How to Grow Your Money Even After You Stop Working.
Make your financial decisions even more beneficial by joining a Life Plan Community like The Cedars of Chapel Hill, North Carolina. To find out more about the benefits of living in a community of active, like-minded retirees, contact us to speak to a knowledgeable and friendly representative.
Photo Attribute: Terri Heisele, FreeImages.com