If your kids are grown, your house is paid off, and you’re about to retire (or have already!), it may seem like the days of life insurance are over. You may think that your savings and investments, combined with Social Security, will cover whatever comes next.
In fact, these misconceptions prevent many retirees from purchasing or maintaining needed life insurance coverage. If any of these four myths apply to you, you should consider take out life insurance again to avoid unpleasant surprises.
1-I don’t need life insurance once my children are independent and my mortgage is paid off.
Probably, but if you die today, your spouse will still have to pay daily living expenses. What if your spouse lived ten, twenty or even thirty years longer? Would your financial plans, in the absence of life insurance, allow your spouse to maintain the lifestyle you worked so hard for?
2-When I die, I would have saved enough money to benefit my children and grandchildren.
Surely working long hours and carefully managing your family’s finances will help you achieve your goal. But what if you don’t live long enough to reach your financial goals? And if an economic crisis or concern prolonged had a negative impact on your investments?
Life insurance can create instant wealth, allowing you to leave a legacy for future generations or fund a charity or cause close to your heart.
3-I thought I would need life insurance to pay inheritance tax, but that’s no longer a problem.
Even if you are not currently subject to federal estate tax, there is no guarantee that you will always be. Tax laws are subject to rapid and regular change. Even if you don’t, there are plenty of other reasons to keep life insurance later in life.
For example, at the time of your death, life insurance can cover expenses such as state inheritance tax, unpaid debts, probate fees and funeral arrangements, allowing your loved ones to focus on their grief rather than financial concerns, which can sometimes lead to conflict.
It can also be used to divide an estate between heirs or for the succession of a business.
4-Life insurance is too expensive to buy when I’m older.
While it’s true that the cost of life insurance increases with age, that doesn’t necessarily mean it’s out of your budget. A healthy, non-smoking 55-year-old male, for example, can purchase a 20-year, $500,000 term insurance policy for about $2,625 a year. The annual cost for a healthy 55-year-old woman is approximately $1900. So if you need coverage on a regular basis, don’t assume you can’t afford it.
Contrary to popular belief, life insurance remains extremely useful, even when you are planning your retirement or are already there. This type of insurance is very practical for anticipating and managing the various unforeseen problems of life and makes it possible to protect your loved ones from any worries to be managed in your absence. If one of the 4 previous myths led you to stop your life insurance, we advise you to reconsider your choice.