Part 1 in a two-part Series
ONE: Seniors purchase life insurance to pass more money to their spouse, heirs, or a favorite charity.
Typical financial advice tells people, “You won’t need life insurance once your children are grown.” That advice leads people to buy only term insurance when they are younger than often expires in their 60’s—if not sooner.
When your children are independent, many older couples wished they had saved more. They are also looking for strategies to leave more to loved ones and causes they care about and less to the IRS! This especially true due to the tax law changes in 2017.
Life insurance is an ideal and most efficient way to leave more money for a surviving spouse, child, partner, or even a sibling. Life insurance multiplies your premiums into a greater death benefit that is paid to the beneficiary income tax-free.
The death benefit is paid in a lump sum or can be converted into an immediate annuity. This provides a safe and guaranteed future income for the survivor.
TWO: You can obtain “three in one” coverage for health emergencies, long-term care expenses, and life insurance.
Many people do not purchase long-term care insurance because they think they will never use it. Thus, it becomes an expense and loss.
But, with the proper life insurance riders, the dollars are used more efficiently, providing multiple protections! Now, long-term care riders are also being offered that allow the insured to use a hefty portion of their own death benefit for long-term care expenses after waiting periods are satisfied – at zero cost! If you didn’t need long term care, you did not pay for it.
Life insurance companies also offer special riders that allow the insured to convert a portion of their death benefit into living benefits, should they be diagnosed with a terminal disease or even a serious or chronic illness. Combining such life insurance riders allow the insured to combine different types of coverage in one cost-efficient policy.
THREE: You can add stability and liquidity to your portfolio.
Most people’s retirement portfolios are largely comprised of mutual funds and stocks. As people close on retirement, they approach the “red zone.”
The red zone is the time period five years before and five years after, they stop working. These are the most critical years and most devastating to retirement accounts invested in mutual funds and stocks. We become more risk-averse, placing a high value on preserving and protecting assets. We can’t wait for the 10 or 20 years for markets to come back.
Life insurance is one of the most stable assets around. It does not roller coaster ride like stocks. It is not leveraged like bank deposits. Whole life insurance has nearly a two-century history of paying claims and honoring guarantees, even during the Great Depression, recessions, and pandemics, like COVID-19.
You might think the cost of this stability is rock bottom returns. The truth is that whole life insurance returns are tax-advantaged and equate to higher returns than most people realize when compared with taxable investments.
Will Rogers remarked, “I am more concerned with the return of my money than the return on my money.”
Additionally, many investors use their cash value accounts to build new assets, such as leveraging a policy for a down payment on a cash-flowing piece of real estate or business.
At almost any age, life insurance is the best possible asset for passing wealth and for long-term saving (10+ years). A whole life policy gives you great flexibility to replenish, replace, or preserve assets.
I specialize in whole life insurance. I am here to help you make informed choices about life insurance and appropriate investments.
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.
Charlie Nunez, RICP
Retirement Income Certified Professional
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