Life has various stages, each with unique insurance and financial planning needs. If you’re in the retirement stage of life and still have the same Life insurance coverage that you had 20 years ago, then your coverage is most likely not very suited to your current needs and age. There are also some retirees that feel they don’t need Life insurance at this stage of life or that it’s too expensive for them to maintain. Completely dropping all Life insurance isn’t a very prudent move either. While you might not need the degree of coverage you did during your child rearing and mortgage years, maintaining age and need appropriate Life insurance should still be a factor in your financial plan.
The following five points are prime examples of why you still need Life insurance through your retirement years:
- Healthcare Debts. The last thing you want to do is to pass on your healthcare debts to your loved ones. A Life insurance benefit can ensure that your family has the funds necessary to pay your medical bills, without reaching into their own pockets.
- Funeral Costs. Funerals are far from cheap. In fact, according to the National Funeral Directors Association, the cost of an average casket and vault is $6,500 dollars. Combine that cost with a tombstone, cemetery fee, flowers, and so forth and the cost of just an average funeral can be a heavy, maybe impossible, burden on your survivors. Many survivors use a portion of the Life insurance benefits to pay for the funeral costs.
- Dependent Care. Life insurance is an important element in allowing your dependents, such as a spouse or special needs child, to continue to enjoy their current lifestyle. This is especially important if the spouse isn’t eligible to receive your Social Security or pension benefits.
- Estate Taxes. Depending on how large your estate is, your survivors may be responsible for estate tax rates of 37% or more. Sometimes an estate consists of assets, such as a family business, that aren’t desired to be broken up or that aren’t as easily liquidated. Life insurance can be used to cover the estate taxes and allow your survivors to keep your estate intact.
- Charitable Gifts. Some retirees have a non-profit organization that they wish to leave their Life insurance policy benefit. If so, do make sure that the organization will accept your policy and has a 501 (c) (3) not-for-profit status. Some organizations might need the Life insurance policy arranged a certain way or not be able to handle the donation at all. If you name the charity as the owner and beneficiary of the insurance policy, then you can deduct the premiums from your federal taxes.
In closing, these are just a few of the reasons that it’s necessary to maintain your Life insurance during your retirement years. Contact your insurance agent if you have any questions about the type or amount of Life insurance coverage that best serves your age, finances, and personal needs.