Aging America Still Needs Permanent Life Insurance
“The kids are on their own, the house is paid for, and Ive got plenty of money to retire on. What do I need permanent life insurance for?”
Everyones situation is different, but there are lots of reasons why permanent life insurance makes sense for retirees.
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Lets first acknowledge that researchers have found “cost” to be the biggest objection to buying life insurance coverage. However, some of todays low-cost universal life products have become quite reasonable. In fact, this next generation of guaranteed products provides a lifetime of guaranteed protection for a fraction of the expense of a whole life policy. Hence, the cost objection may become less important as time goes on.
Now, for the reasons to buy life insurance.
Legacy planning. How do the people you speak with every day want to be remembered? Most parents, if you ask them, would like to leave a legacy for their children and especially their grandchildren. As a result, many retirees continue to save the money they spent a lifetime accumulating just to pass it on to the next generation.
The issue to keep in mind is that the ultimate inheritance can vary greatly, depending on type of asset being transferred, investment returns prior to death, living expenses and the continued saving discipline of the retired couple. Furthermore, these assets may be subject to probate and a variety of taxes, which can cost heirs time and money before they see any inheritance.
Permanent life insurance provides a solution to this uncertainty. At death, permanent coverage creates an assured legacy for heirs. Your clients will know exactly what their children will receive, without having to worry about saving any of their existing assets to pass on. They now have the opportunity to maximize their retirement income and spend their assets while knowing they have taken steps to guarantee a legacy for their childrens family.
In addition, since a life insurance policy is a contract between your client and the insurance carrier, the proceeds go directly to the beneficiaries named in the policywithout going through probate court.
For the wealthy retiree, there remains the threat of estate taxes. Under current tax law, the estate tax is repealed in 2010, only to return in 2011. Does your client feel “lucky” enough to die the one year estate taxes are repealed? Prudent planning for these retirees includes the use of permanent life insurance to address this uncertain estate tax environment.