Well, let’s think about this. You’ve earned the majority of what you’ll ever earn over the past 40 years. You should have accumulated enough assets to retire and live happily ever after. The opportunity and the ability to add to this are limited by both your age and your health. But the past few years have been an eye opener about how uncertain your financial future may be.
Most people think of life insurance only when they want to protect their family and provide a source of replacement income in the event of their death. They don’t think of it as a buffer to replace lost assets due to market volatility—for example, the market crashes and you die before you have the time to rebuild or replace the lost assets.
Yes, I know. Your children are grown and gone. The mortgage is paid off. You have minimal debts. So, why should someone 60 or older consider purchasing permanent life insurance?
Reasons for life insurance after age 60:
- Offset loss of retirement income to spouse at death.(Pension max)
- Pay costs associated with death
- Pay final expenses
- Pay estate and inheritance taxes
- Pay off debts
- Pay income in respect of a decedent taxes on IRAs, 401(k)s etc
- Provide for the care of a disabled child, spouse, etc.
- Offset loss of key person in a small business
- Provide funds to buy out interests of a deceased business partner or co-shareholder
- Dividends can be a tax-free source of supplemental retirement income.
- Cash surrender values are a source of emergency funds during life.
- Cash surrender values can be wholly or partially annuitized to provide additional guaranteed lifetime income.
- Any unused funds can be used to provide a gift to grandchildren.
- Provide a gift to charity at death or prior if desired.
- It adds flexibility to the estate plan.
- It allows parents to balance uneven distributions of property or business interests to children.
- It allows parents to spend all their money and still leave a legacy to their children or grandchildren.
- It is creditor proof in most states.
- It can be designed to provide an “inevitable gain,” no matter when one dies.
- It can collateralize loans. As people live longer, they tend to take on more debt or debt that has a longer amortization (just look at all the big houses being built by people who consist of a family of two post-65 adults!)
Review your personal situation. You may find there are more reasons to own life insurance after age 60 than you think.