Let’s think about this: You’ve earned the majority of what you’ll ever earn over the past 40 years. You should have accumulated enough assets to retire and live happily ever after, right?
The ups and downs of the financial markets, however, have been an eye opener about how uncertain your (or anyone’s) financial future may be.
Most people think of life insurance only when they want to protect their family and provide a source of replacement income in the event of their death. They don’t think of it as a buffer to replace lost assets due to market volatility—for example, the market goes south and you die before you have the time to rebuild or replace the lost assets.
They don’t think of life insurance as a buffer to replace lost assets due to market volatility.
Yes, I know. Your children are grown and gone. The mortgage is paid off. You have minimal debts. So, why should someone 60 or older consider purchasing permanent life insurance?
Here are some reasons for life insurance after age 60:
Offset loss of retirement income to spouse at death. (Pension max)
Pay costs associated with death
Pay final expenses
Pay estate and inheritance taxes
Pay off debts
Pay income in respect of a decedent taxes on IRAs, 401(k)s, etc.
Provide for the care of a disabled child, spouse, etc.
Offset loss of a key person in a small business
Provide funds to buy out interests of a deceased business partner or co-shareholder
Dividends can be a tax-free source of supplemental retirement income
Cash surrender values are a source of emergency funds during life
Cash surrender values can be wholly or partially annuitized to provide additional guaranteed lifetime income
Any unused funds can be used to provide a gift to grandchildren
Provide a gift to charity at death or prior if desired
It adds flexibility to the estate plan
You can balance uneven distributions of property or business interests to your children
You can spend all your money and still leave a legacy for your children or grandchildren
It’s creditor proof in most states
It can be designed to provide an “inevitable gain,” no matter when you die
It can collateralize loans. As people live longer, they tend to take on more debt or debt that has a longer amortization (just look at all the big houses being built by people who consist of a family of two post-65 adults!)
Review your personal situation. You may find there are more reasons to own life insurance after age 60 than you think.