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Reevaluate Life Insurance at Retirement

Reevaluate Life Insurance at Retirement

As retirement age approaches, it’s usually a good time to reassess your life insurance policies to see if your needs have changed. With your children on their own and no earned income to replace, you may no longer need a large life insurance policy. Especially if your insurance premiums are high, you may be tempted to cancel the policy, take the cash surrender value, and enjoy retirement. Before doing that, however, make sure there aren’t other uses for your life insurance policy, such as:

  • To leave a legacy to heirs

    Even if the money isn’t needed for your children’s support after your death, many people like the thought of leaving a large inheritance to their children or grandchildren. With an insurance policy in place, you can feel free to spend your retirement assets, knowing the insurance policy proceeds will be paid to your beneficiaries after your death. If you have a large estate, the policy proceeds can be used to help pay estate taxes.

  • To pay your grandchildren’s college expenses—

    With the rapidly increasing costs of college making it more and more difficult for parents to cover this cost, you might want to use an insurance policy as a college fund for your grandchildren. If you’re still alive when they start college, you might be able to borrow some of the cash surrender value to pay these costs.

  • To support adult children

    Perhaps your child is a doctor, but has significant debt from college. Or your child might have a job that doesn’t pay a significant amount of money.

  • To provide a large charitable contribution

    A life insurance policy can serve a couple of purposes when making a large charitable contribution. You can name the charity as the beneficiary of the policy. Or you can leave other assets to the charity thqat would have been included in your estate and possibly subject to estate taxes. The proceeds of the life insurance policy, if properly structured, can then be paid to your heirs estate- and income-tax free.

  • To help deal with long-term-care costs—

    Many individuals don’t purchase long-term-care insurance, believing their spouse will take care of them. However, when one spouse dies, there may not be anyone to take care of the surviving spouse. The proceeds of a life insurance policy can be used to provide long-term care.

  • To optimize pension benefits—

    When retiring, irrevocable decisions about pension plan benefit payments must typically be made. An individual life income option will pay higher benefits than a joint and survivor benefit, but your spouse will not have pension benefits if you predecease him/her. You could use the proceeds from a life insurance policy as a source of income for your spouse after your death.

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This site is for informational purposes only and is not an offer to sell or a solicitation of any offer to buy any securities or investment advisory services which may be referenced herein. We may only offer services in states in which we have been properly registered or are exempt from registration. Therefore some of the services mentioned may not be available in your state, and if not, the information is not intended for you. ALMEA Insurance, Inc. is not a registered broker/dealer or investment advisory firm. Bill Wilson is licensed to offered securities through KMS Financial Services, Inc. ALMEA Insurance and KMS Financial Services are not affiliated and there is no common ownership or control. | Member FINRA / SIPC