The Real Reasons Why You Should Consider Life Insurance As Part Of Your Retirement Insurance Solution Plan
The Death Benefit: The death benefit left to your heirs, especially a spouse, can be helpful in several ways. It can:
- Pay for your funeral, burial and final expenses
- Replace or supplement lost Social Security income
- Fund an annuity that will provide lifetime income
- Fund a Long-Term Care plan for the surviving spouse
- Pay off debt
- Invest in dividend-paying stocks or bonds
Long-Term Care: As mentioned in the Long-Term Care section almost all future, soon-to-be and some current retirees should at least consider and explore LTC insurance options.
Life insurance with a Long-Term Care rider/benefit can be an exceptional way to use life insurance in retirement. Life insurance policies with an LTC rider or benefit are known as hybrid plans or linked benefit plans.
Life insurance with a Long-Term Care rider/benefit provides:
- Long-term care coverage for one or two people
- A death benefit: Your heirs will receive the life insurance death benefit, minus any funds used for any LTC benefits received. If you never use the LTC benefits, then your heirs will receive 100% of the death benefit—which is typically 1.5-3 times the premium invested.
- Cash Value: If absolutely necessary, you would have access to the cash value of your life insurance policy. Any withdraw from the cash value will effect the LTC and death benefits. So, be careful using the cash value.
Tax-Free Income: The cash value in a Whole or Universal Life policy can be withdrawn (typically) tax-free and used as income. Income that can help:
- Replace lost wages
- Replace or supplement lost Social Security income
- Cover living expenses
- Pay for in-home care
- Pay off debt
This is a strategy more and more people are employing to avoid significant income taxes in retirement.
*Always consult your accountant/CPA when it comes to potential tax benefits and consequences before purchasing a life insurance product.
