Should You Keep Your Life Insurance In Retirement? Ep #7
You’ve done the responsible and smart thing by paying into life insurance over the years but you’ve finally made it to the finish line - retirement! What do you do with your life insurance now? Do you still need it? Is there a better way to use that investment tool?
At the end of the day, forward-thinking people like you are looking to make the smart and responsible decision - I’ve done the work so you don’t have to go chasing down all the details.
On this episode, I’ll help you find out if you still need life insurance, what my preferred method of life insurance is, what to do if you don’t need your life insurance policy anymore, and so much more! There is a ton of information you’ll find useful on this episode, don’t miss it!
You will want to hear this episode if you are interested in...
Do you need life insurance? [1:20]
What type of life insurance policy should you purchase? [4:20]
Three types of permanent life insurance policies [6:10]
What if you don’t need a life insurance policy anymore? [8:10]
What is a “1035 exchange?” [10:30]
Closing thoughts and key takeaways. [13:10]
Do you need life insurance?
Have you determined if you currently need life insurance? Most people who need life insurance are those who are in their peak income-earning years, people who have non-liquid assets, those who still have minor children, and people who want to leave more money behind than they currently have saved or invested. Just because there are many people out there who decide to use life insurance as a retirement tool, it doesn’t mean you automatically need to do the same!
Assess your situation and really take a look to see if you need life insurance at this point in time - there might be better options out there for you to invest your money. To learn more about determining if you need life insurance and other helpful insights, make sure to catch this episode!
What type of life insurance policy is the best fit?
If you’ve determined that you still need life insurance, what type of life insurance policy should you get? There are two main types of life insurance policies, term policies, and permanent policies.
Term policy - A term policy covers you for a certain period of time - if you die during that term policy then your beneficiaries get the full amount. I encourage people to buy term and invest the difference.
Permanent policies -
Whole life insurance policy - the most conservative and the most guaranteed.
Universal life insurance policy - more flexibility but fewer guarantees.
Variable universal life insurance policy - more flexibility - the funds can be invested in stocks for a greater return.
Each of these types of life insurance policies has their benefits and their drawbacks, I encourage people to really take the time to review their options and revisit their prevision decision to make sure they are on the right track.
What if you don’t need life insurance anymore?
If you’ve come to the point in your financial journey where you don’t need life insurance anymore, what should you do? If you have a term policy that you no longer need, you simply stop paying the monthly premium. If you’ve selected a permanent policy, you’ll want to reach back out to that insurance agency that you set up the policy with and request an in-force illustration. An in-force illustration is a picture of your insurance policy as it stands now. It will show the exact results of what has happened from the initial policy inception to today with future projections based on current assumptions.
After your in-force illustration, if you find that there is no cash value in the policy then you simply walk away. If there is cash value to your policy, you’ll want to find out if it the value is taxable or not. I go into even further detail on this critical topic on this episode, make sure to tune in!