Tuesday, June 2, 2020

Your Long-Term Retirement Plan And Life Insurance


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A life insurance policy, which pays out a sum of money upon the policyholder's death or after a set period, is typically designed to ensure financial protection for any dependents that rely on your income or support. That is why a family's primary breadwinner often purchases one. Does life insurance have a place when it comes to financial planning for retirement?


Here is a look at the many benefits associated with incorporating this into your long-term retirement plan.


  • Make sure your assets are distributed equally among your heirs -- First and foremost, one of the main benefits associated with life insurance for retirees is to ensure that your assets are divided equally among your heirs. For example, if you wish to leave your house to your first child, and your stock portfolio to your second child, you could then use the benefit of your life insurance policy to equalize those gifts for your third child.

  • Cover any unexpected costs -- A cash value policy such as life insurance is beneficial because it can assist you when paying off any unexpected expenses. You can do this by either taking out a loan against the policy or withdrawing some of the cash value. Of course, this means that the death benefit will get reduced, but in times of need, this can be extremely advantageous.

  • Protect against downturns in the stock market -- Are you worried that a market crash could impact your investments? If so, it is a good idea to take out a life insurance policy, as this could be a useful backup plan should the value of your portfolio go down to the point whereby your lifestyle gets affected and your income stream reduced.

  • Effective estate planning -- Another reason to incorporate life insurance into your retirement planning is that it is an excellent estate planning tool. Worrall, Moss, Martin Lawyers can assist with your estate planning. For instance, you can pay estate taxes by using life insurance death benefits as opposed to having to sell assets at a time that is inopportune.

  • Pension replacement -- Finally, one of the key reasons to consider life insurance is to replace your pension. If your pension furnishes a big part of your retirement income, life insurance is ideal if your dependents cannot access your pension once you die.


As you can see, there are lots of benefits associated with incorporating life insurance into your retirement plan. However, you need to consider carefully whether this is right for you. One thing you need to look at is whether your spouse and children are self-sufficient. If you have a young family, it is likely you will need the security provided by life insurance, but this need can change over time. You also must consider whether you need to pay estate taxes, as life insurance can be an excellent estate-planning tool, as mentioned above.


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