 | Lori Johnson is an insurance agent for Farm Bureau Financial Services, located at 219 S. Ozark, Girard, KS 66743. She can provide strategies for all stages of life: Vehicle, Homeowners, Farm, Business, Life Insurance, Annuities, Mutual Funds, Disability, Long-Term Care, Retirement and Education Funding, She is your resource for innovative insurance and investment products and services. To schedule an appointment, please call (620)724-4213 or email lori.johnson@fbfs.com. |
Insurance
2011-12-27 11:46:47
Is it ever too late for life insurance?
Q: Many people, when thinking of life insurance, imagine that it is something for the young only. They believe that life insurance is a tool best used by newlyweds with mortgages, parents of young children and spouses who are both employed. What does that mean for seniors? Does that mean there is no need for life insurance for those who are retired?
A: The answer to that question depends on your family’s needs as well as your financial picture upon retirement.
Your Family’s Needs
One of the biggest concerns among retired individuals is whether or not they have enough money set aside to last their entire lives. Since life expectancies are predictable, but an actual lifespan is not, retirees are left with an uncertain bet that the amount of money they saved for retirement is enough. Sometimes, this bet is funded with a straight life annuity or pension that pays out like a straight life annuity. Both of these instruments could impact the surviving spouse’s income if the annuitant or pensioner dies and there is no death benefit. When a surviving spouse stands to lose a portion of his or her income after that death of their spouse, then a life insurance policy can provide a much needed source of continuing income to replace the lost amount.
Another consideration is whether or not you would like to use death benefit proceeds to create a trust for your grandchildren. Leaving a trust account for their college or adult years can help take some of the financial burden from your children and your grandchildren as it may allow them to avoid student loans and other debt. Funding the trust with life insurance proceeds takes the funding burden off of your spouse and creates a fixed amount for the trust.
Financial Planning
Life insurance policies are great tools for making charitable donations upon death. If your spouse is not in need of the death benefit proceeds you can set them up either in a charitable trust or by simply naming a charity as your beneficiary. This allows your surviving spouse to see all the good your donation will do, without it impacting his or her financial picture.
Depending on how well-planned your retirement has been you may accumulate some debt in your later years that can be paid off with your life insurance policy death benefit. Debt as simple as a car loan, small home equity loan or even a loan for new furniture can cause undue stress to your surviving spouse and a life insurance death benefit is an easy solution to get rid of it.
Another financial planning consideration is estate taxes. While life insurance death benefits are generally not taxable, the rest of your estate may be. Instead of forcing your surviving spouse to liquidate assets or take funds from a retirement account to pay estate taxes or income taxes for the year you pass away, why not buy a life insurance policy to fulfill that need?
Conclusion
There are some many different ways that a life insurance policy can improve your surviving spouse and family’s lives, no matter what your age is. That it is an expense everyone should consider. Without knowing what needs the future will bring, and what health complications could impact your ability to get insurance, the time to buy is now.
