As retirement draws near, it’s time to examine the life policies of your clients.
The original goals that drove the policy likely no longer apply: the house is paid for, the kids have graduated and have their lives in order; a good retirement income is in place. As retirement looms, old life plans can benefit from a few adjustments.
For couples, it makes sense to keep a post-retirement life policy. Death of one spouse would mean the loss of some Social Security income, potentially leading to a significant decline in lifestyle if not handled correctly. A death benefit of some amount – less than was needed during the working years, but still substantial – can go a long way to smoothing the process.
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Death benefits have other advantages for seniors. Burial costs are quite high and can be provided out of the disbursement. Many parents want to leave a little something to their children. Grandchildren, who are often still young and can use a monetary boost, are frequently the targets of older people’s largesse, as are charitable causes. A life policy addresses all of these needs.
In any case, adjustments will be needed. For term policies, it’s simple: you can either keep paying the premium, shrink the policy, or stop it altogether. In most cases, terminating the policy makes the most sense, as they are really designed for people who are still in the workforce.
For whole life policies there is more to decide, due to their cash value. You can surrender the policy and take the accumulated cash, but this could come with a tax penalty. A better approach might be to take out a loan on the policy. The interest is reduced by the continued earnings of the policy’s cash value and in the end, the death benefit can be used to repay any outstanding balance.
For more information, please read:
Good options for old life insurance policies | Fosters