Many people, particularly couples plan their retirement for decades when an unexpected event upsets all of that work. An unexpected death may put the survivor in a position where they must continue to work or worse, a financial predicament that has no clear answers. There is where life insurance for retirement becomes paramount for protecting your retirement plans.
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How Life Insurance Works with Your Retirement?
If you have reached or past retirement age and are relying on both incomes to pay for expenses, then having life insurance can act as a cover in case one partner passes away unexpectedly. This means that you’ll need a life insurance and retirement plan that works together so that if the unexpected should occur, you can protect your financial situation.
For most families, life insurance is designed to protect the spouse and the children in case a parent passes away. However, as the children grow up and move out on their own, the life insurance needs change to protecting the retirement plan for the surviving spouse. This will most likely mean changing over your current life insurance policy assuming that it was designed to cover your children and creating a new one that instead protects your spouse’s retirement income.
Over time, you can adjust your life insurance needs according to your retirement savings so that it compliments what you have earned.
How Retirement Plans Work with Your Life Insurance?
It may seem strange that retirement plans can actually benefit life coverage for 65+ people, but the truth is that your retirement can act as a temporary shelter as you adjust and change over your life insurance policy.
When you make out your retirement plan, working in your life insurance coverage is very important because this is a resource that can be used even if both spouses outlive the policy. This is because certain life insurance plans such as whole life can be cashed in after they mature which means that you have an additional source of income.
Cashing out a whole life insurance policy means that you can switch to a less expensive term life coverage that offers the same benefits, but does so with a fixed time limit. For example, if you have a $100,000 whole life policy that has matured, you can then cash it in and purchase a term life policy that will last for 10, 20 or 30 years depending on your age and needs for the same amount in benefits. You can do the opposite as well which is one debatable theories in life insurance industry that says purchase term policy and invest the difference instead of buying whole life insurance. To learn more about this, click here.
The money left over can be used as you see fit which makes it part of your retirement benefits. Plus, the income you earn from other investment sources can be used to pay for your term life insurance that has a lower premium as compared to whole coverage.
So, your retirement plan can be used to fund a new life insurance policy that is less expensive and allows you to use the extra money as you see fit. Life insurance and retirement savings go together as one protects the other when it comes to your future.