If you retire, the only thing that will change in your daily life is your self-employed or work-related income ends.
The rest is the same: your family, debts, and bills.
Even if your earnings have ceased doesn’t mean that you do not need life insurance. Here are some reasons to have some insurance.
Repaying the Debt
Have you paid your mortgage off? If you don’t want to burden your spouse with a huge debt when your death, You can have an insurance policy for a certain period to pay off the mortgage.
In addition to traditional mortgages, reverse mortgages are also growing in popularity among retirees. The reason for this is the rise in the prices of homes. Reverse mortgages allow you to access your home’s equity through investment without needing interest or principal payments.
If you’re considering getting reverse mortgages, securing life insurance is essential to ensure you’ve covered the loan.
Income Replacement for Dependents
Are you a member of income that is reduced or ceases to exist at the time of your death? If you pass away prematurely and your spouse dies, will they be able to afford their entire life?
In addition to your spouse, are you the only parent of children under 18 or adults depending on your support? You could use temporary insurance to cover the gaps between today until your minor children become independent.
For adult children, are they dependent on their parents for the rest of their lives due to physical or mental impairment? If yes, then permanent insurance is better over the term.
Final Costs
Final costs include funeral expenses and the cost of burial or cremation.
If you wish for your family members to have enough money to “put you to the ground,” you’ll require life insurance. The best kind of insurance to cover this is a kind of permanent insurance, such as universal life or whole life.
In addition to the funeral, some necessary expenses that you could be able to pay include executor and probate costs.
Leaving an Inheritance
Many people leave their inheritance to their loved ones via the will. The most popular items passed through choices include real estate and unregistered investments. These assets might not be liquid, or your cherished family might sell them at the wrong time.
The estate could spend several months or even years locked in court fights if there’s a dispute.
If you’re looking to leave a liquid cash inheritance, the best option is to buy a Life insurance plan. The policy’s proceeds will not be distributed to your estate, ensuring that your beneficiaries can receive the funds quickly.
Estate Planning
Apart from leaving an inheritance, you can also use life insurance to implement different plans for your estate. Here are a few most popular strategies:
- Charitable giving
- Insured annuities
- Estate equalization
- Pay off taxes
All of them will require an amount of life insurance plan to guarantee that you receive a payment when you die.
The Use of Whole Life Insurance for Retirement
Many universal and whole life insurance policies come with cash value that can get used for retirement savings. The advantage of investing in a permanent insurance policy is that the cash value increases tax-free.
When you retire, your years of tax-free savings will generate a sizable cash value. Once you’ve retired, you can withdraw cash directly from the insurance policy to augment your retirement savings.
The most tax-efficient method of accessing the funds is to utilize your insurance policy to serve as collateral to secure loans. When you die, and you die, you can use your death benefits to repay this loan, and the rest get distributed to the beneficiaries of your estate. It is known as the insured retirement strategy.
It can take a long time for the value of cash to increase; therefore, if you’re considering the idea after retirement and have no money, it’s likely too late. You’ll need to purchase insurance to carry out this plan during your working days.
Ottawa Life Insurance is committed to making sure our clients are secure in moments of need. Contact us at (613) 454-1424 or email at info@ottawa-lifeinsurance.ca for further details.
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