Six Reasons People Buy Life Insurance After Sixty – Part two
FOUR: You can decrease your taxes and increase your future income.
Many seniors cash in their stocks for bonds as they approach retirement. However, there is an alternative strategy that may work much better from both a cash flow and net worth (value of estate) perspective.
Financial software expert, Todd Langford, presented to the Network of National Estate Planners. He illustrated why a better option may be to trade in your bonds for a whole life insurance policy. Watch the presentation: “More Money in Retirement.”
Seniors “living off their interest” often pay higher income taxes than necessary. Many can reduce taxes by shifting their income streams to include non-taxable and tax-free sources, including converting the policy to a tax-advantaged immediate annuity or keeping a policy in place and utilizing life insurance dividends.
FIVE: Life Insurance gives you a “permission slip” to spend other assets such as investments and home equity.
Many retirees have assets that they are reluctant to spend down.
Surveys consistently show that the fear of running out of money is the top fear for many seniors! What if you live longer than you expect? What if your assets and your social security aren’t enough?
There are strategies you can use to stretch your assets using life insurance. It can give you more options to:
- spend assets and still leave an inheritance
- insure that a surviving spouse is provided for
- create a new income stream in your later years (annuitizing your policy) or
- sell your policy for cash in your 80’s or beyond (this is called a life settlement).
Permanent life insurance is like a “permission slip” to spend the assets they were intending to preserve and leave for heirs, such as homes and investment accounts.
Five such strategies are outlined in Live Your Life Insurance.
One such strategy is to reverse mortgage your home, which actually turns your home into an income stream. A reverse mortgage can help seniors in several ways.
- First, if they had a mortgage payment, it disappears.
- Secondly, they are paid an income stream.
- Thirdly, the income is tax-free.
When you add life insurance to the assets, the home can be preserved! Heirs can use the money to pay off the reverse mortgage, or they can choose to keep the money instead of the house if that works better for them. (Many adult children don’t want the family home and it may be a burden for them).
Contrary to public opinion, your home does not need to be free and clear. You just need a good portion of the equity in it (generally, 50% or greater).
Six: Use life insurance to “repay” adult children who may make sacrifices to assist aging parents.
Even when seniors have adequate assets and income to support their basic needs, they may find that as they age, they need help with driving, shopping, cooking, cleaning, or gardening. Hiring out and paying for these services can deplete assets quickly, as well as create other headaches.
Adult children often step in to assist, when possible. Some even become full-time caregivers. Life insurance is one way to repay those who have given of their time or money to assist you.
Increasingly, adult children are purchasing policies on their own parents. In this way, they can “fund their own inheritance” as well as recoup some costs that may have been lost while caring for a parent.
Get a Life Insurance Quote
You’re probably not too old for life insurance. Request an appointment to discuss your unique situation today. I use three top-rated mutual life insurance companies. I can run illustrations to show you how a certain type of policy might perform. There’s no sales pitch or long presentations. We’ll evaluate your options and help you move forward only if you are interested.
Next week, I will share Part Two why People Purchase Life Insurance after Sixty.
Sincerely,
Charlie Nunez, RICP
Retirement Income Certified Professional
517-896.7268
To schedule an appointment by Zoom or phone, click here.
