By Institute on Aging
No two people’s needs are the same. But if you have any of these considerations or desires, you may want to talk to your financial advisor about the option of continuing to have or purchasing a life insurance policy.
- Dependent Children or Grandchildren
While many retirees have independent adult children with established careers, that is no longer universal for everyone. Today, a lot of people have dependents even after they retire. A few reasons children might be dependents include:
- You had children later in life, and they are still in school/grad school
- Your children are struggling in their careers
- Your children have had life changes (such as divorce or partner having to move for work) and need help with things like lodging and childcare
- You are responsible for raising your grandchildren
- You have children with disabilities
Some of these are legal dependencies, others are emotional ones. But we live in challenging financial times, and not everyone is in control of their own destiny. Having a life insurance policy to protect those who depend on you after you are gone is a way to create a little bit more security.
- Funeral Costs
The average cost of a funeral in the United States is $7,045, and that’s before cemetery costs. That means that a standard funeral may run as much as $10,000 or even more.
This is where life insurance often comes in. Using it as a hedge against funeral costs is one of the most common uses for life insurance.
- Gifts or Charity Donations
For many people, the chance to leave a charitable donation after they die is incredibly appealing. But unless you are very well-off, it’s hard to plan for this when you don’t know what your expenses will be over the course of your life.
That’s where life insurance comes in. Having a policy for the express purpose of donating to a charity means that you don’t have to worry about circumscribing your spending or inheritance wishes in order to fund a cause of your choosing.
- Collateral or Creditor Proof
There are times as an older adult when you might need a loan. You may be selling your house to move into a more expensive house. You may want to travel. You might be looking to move into an assisted living community.
Whatever the case, it can sometimes be hard to get loans, particularly when you are not working. A life insurance policy is a guarantee of sums, great collateral, and proof to any creditor. It means you can get what you need now on fair and decent terms without burdening your survivors.
- Inheritance or Estate Taxes
This certainly doesn’t apply to everyone. In America, the new inheritance tax shields you up to $11.2 million for a single person or $22.4 for a couple. It could drop to a lower standard (5.46 million and $10.5 million, respectively) in 2025, but that isn’t a sure thing.
Obviously, not everyone will be impacted by the inheritance tax. But we’re optimistic here, and we hope some of our readers have been fortunate enough in life to have these considerations!
If this is you, you may want a life insurance policy to cover the taxes of what you will leave your inheritors. This way, they don’t have to pay the taxes on what is left to them, so they can collect the full amount you want to leave.
Life insurance policies aren’t needed for everyone after they retire. But if you have talked to your financial advisor about your plans and determine that it makes sense, they can be a source of security.
