The right coverage might help to insulate
you against a money crisis.
Provided by Benjamin Bogetto
Most people begin insuring themselves when
they marry or start a family. They buy coverage in response to two potential
calamities – disability during their working years, and death.
Somewhere between youth and death comes
retirement, and in retirement, the role of insurance is often downplayed. Does
a retired multimillionaire really need a life insurance policy? Now that he or
she is not working, what is the point of having disability coverage?
Make no
mistake, insurance can play a vital role in retirement planning. It may help to keep a
retiree household financially afloat in a money crisis. It can also be used
creatively to address other financial concerns.
What can
life insurance do for a retiree before
he or she dies? Many permanent life insurance policies accumulate cash value over
time. Potentially, that cash value could
be tapped to pay off medical expenses, education debt, mortgage debt, or debts
owed by a business. It could fund a buy-sell agreement. It could go into an
investment vehicle that could later pay out income. While the death benefit of
a policy may be reduced as a consequence, the trade-off may be worth it for the
policyholder.1
What else
can life insurance do for a retiree household? It can help the kids.
Sometimes a retired dad or mom is 20-30 years older than his or her spouse, and
the kids are minors. If the older spouse dies, the death benefit can help to
provide for these minor children, who could have special needs.1
There is also the matter of income
replacement, even in retirement. When a retiree receiving a pension dies, the
surviving spouse may subsequently get far less pension income. A life insurance
death benefit may help to make up for it. In another scenario, a widowed spouse
may elect to live on a life insurance policy’s lump sum death benefit for a
year or two, as an alternative to drawing down tax-advantaged retirement
savings accounts.1,2
How about
disability insurance? In some households, one spouse retires, but another spouse keeps
working well into his or her sixties and earns a large income. A couple or family
would definitely miss that income if it went away. Keeping disability insurance
coverage may be very wise in such instances.2
Long-term
care coverage is expensive, but not compared to the cost of eldercare. Imagine paying $6,235 a
month for a semi-private room in a nursing home. Outrageous? No. Merely
average. According to the Department of Health and Human Services, that is the
average monthly cost for such care today. That comes to $74,820 annually.2
Financially speaking, that kind of expense
could break the back of a retiree household. Medicare and disability insurance
will not absorb the cost – one that could deplete a retiree’s entire savings,
with the next step being Medicaid or turning to adult children (who will be
retired or approaching retirement themselves). When eldercare is needed, the
daily benefit from long-term care coverage can feel invaluable. That benefit
can also fund home health care and assisted living services.2
Liability
insurance may come in handy. In certain states (such as California),
retirement accounts are not protected against creditor lawsuits. So if a
judgment against a retiree in one of those states is large enough, retirement
account assets may be seized to satisfy it if liability limits on an auto or
homeowner policy are too low. This is why an umbrella liability policy may have
merit for some retirees.2
Insurance
should not be a “missing piece” in your retirement plan. You may need life,
disability, long-term care, or liability coverage more than you think.
This material was prepared by MarketingPro, Inc., and does not
necessarily represent the views of the presenting party, nor their affiliates. This
information has been derived from sources believed to be accurate. Please note
- investing involves risk, and past performance is no guarantee of future
results. The publisher is not engaged in rendering legal, accounting or other
professional services. If assistance is needed, the reader is advised to engage
the services of a competent professional. This information should not be
construed as investment, tax or legal advice and may not be relied on for the
purpose of avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.
Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.
Bogetto &Associates does not provide legal or tax advice. These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.
Citations.
1 - investopedia.com/articles/personal-finance/010716/do-you-need-life-insurance-after-you-retire.asp
[1/7/16]
2 - money.usnews.com/investing/articles/2016-09-13/4-kinds-of-insurance-that-can-save-your-retirement
[9/13/16]
Financial Health...For Now & Tomorrow
Contact us Today
Website - www.bogettoandassociates.com
Telephone - 314-858-1602
Email - peter@bogettoandassociates.com
10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127
Website - www.bogettoandassociates.com
Telephone - 314-858-1602
Email - peter@bogettoandassociates.com
10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127
No comments:
Post a Comment