Tag Archives: Life Insurance Planning

Nearing retired stage of life how much life insurance do you need?

Nearing retired stage of life how much life insurance do you need?If you are nearing retired stage of life how much life insurance do you need? This is the question that many seniors ask themselves. You probably have heard the horror stories about people who canceled their life insurance and died shortly after. They left a huge debt for the family and no income to support dependents. They were simply trying to save money and did not expect to die so soon.

How do we know how much to have and when should we cancel our coverage? Frankly it depends on your personal situation, both financial and your overall health. On a personal level, the writer has been evaluating their needs for the last few years. They have been decreasing the amount of coverage as they age and the need decreases. It basically comes down to how much debt you have, income needed by dependents after you are gone and your savings.

Nearing retired stage of life how much life insurance do you need?

If you are nearing retirement or are retired, add up your total debt and determine how your estate would pay for this debt. Sell the house, disperse your savings etc. If you have enough to pay off your debt and you have no dependents then you probably have no need for life insurance.

On the other hand you do not want to have your dependents left destitute. They should not be forced to sell the home and lose all of the family savings. Have sufficient life insurance to cover the debt that you owe . Also provide for income as well might be the right answer. A life insurance sales person can help you with deciding the correct amount.

By the time you have retired, your debt levels should be relatively low or zero. Pension income should be sufficient to support any dependents that you may have.

How long do I need life insurance?

life insuranceMost people have life insurance of some kind to cover their debts when the pass away and to also provide for their families when they can no longer support them. No one want to see their family suffer after they are gone, especially if they are the bread winner.

Life insurance can be the safety net if someone suddenly dies leaving debts and dependents. But what should you do once the kids are grown up and out working, raising their own families etc? Of course you still want to have enough money for your debts and to cover your spouse, but how much should you have and when should you stop paying for life insurance. This is a question the writer is struggling with and trying to make a decision on. There is a business decision side to this and there is a emotional side of the decision. So far the emotional side is winning, since I feel that I really do not need to have life insurance at this time in my life. I am just afraid to give it up.

Stop Payments on Life Insurance When I retire?

Some people feel that retirement age can be the trigger to end your life insurance payments. If your income from pensions etc is sufficient to cover all of your expenses and this income will continue after you are gone, then you may want to consider stopping the insurance. However if your spouse will suffer a huge drop in income once you are gone due t a pension or pensions stopping, then you may want to reconsider your insurance coverage and keep it a bit longer.

Does it Depend On Your Personal Situation?

The answer is that it really does depend on personal situations. What your pension income is; how much will be left after you pass; what your savings level is and how much income can be derived from your savings. You may want to keep a small policy to cover your debts and not much more if you feel that there is enough to go around and pay for everything that needs to be paid.

Timing is Important

The longer you wait to make a decision the higher the chance is that you may have a health event. Once this occurs it will be more difficult to not only obtain life insurance. It will also be much more expensive to purchase life insurance. The payout may also be reduced as well.

If you are age 50 or older and have not yet had a health related event, you may want to give your health insurance vs. your life insurance some serious thought.

Long term care insurance is another factor that begins to creep into the picture the older we get. Some experts believe that while you might be dropping life insurance, you may also want to pick up insurance for long term care to cover the situation were you end up needing care of this kind.

Cannot Forecast the Future

None of us can predict what will happen. If we could we would only buy life insurance when we thought we would need it. Life insurance deals more with average probabilities and also our personal family history. We can take a look at how our families survived. How long they lived to help us decide when we need to have life insurance vs. long term care insurance. But there are no guarantees on life so bottom  line is:

  • Have enough life insurance to cover your debts
  • Have enough life insurance to make sure your dependents will live comfortably
  • Consider long term care coverage before it is too late
  • Evaluate your savings etc. Consider whether you want to be able to leave something as a bonus for loved ones.

Once you have made those decisions, the decision about life insurance and how much you should have will become easier to make. That is my take on it, however many people have a variety of opinions on this topic. Leave us your comments and ideas if you agree or disagree.

A Will In Your 20’s or 30’s!

A Will In Your 20'sMany of young people  think of estate planning and financial planning as something only seniors must do. The truth is, if every adult with a spouse, child or business, regardless of age, had solid plans in place when they were young we would all be very well off during mid-life and into our senior years. People with A Will In Your 20’s and 30s are in the prime of life. They have a lot of years to set aside money for later. If you start early then you do not need to set aside very much each year. You can end up with a really nice nest egg .

Young people  marry, start a family and buy a home. Some will also  start or buy a business so there are a lot of pressures on the financial side of life. Which can be made easier if you have a solid financial plan, an estate plan and a will to protect you and your young family.

A Will In Your 20’s or 30’s

Whether we realize it or not we all need to think about the following as we take steps in our lives:

  • Getting married
  • Having Children
  • Buying a home
  • Saving for retirement
  • Buying life insurance
  • Starting a business
  • Preparing a will

Having children

Once you have children, you have taken on a huge responsibility that goes on whether you are alive or die in an accident. One of the ways to ensure that your child has the life you had hoped for them is to have a will that states how your assets will be used to support them and who will look after them. If there is no will, someone in the government will decide who will raise your kids and how the money will be used.

Your will can also state how the funds will be used to support the kids, when they have access to the funds and who will manage the funds until they are old enough to manage the funds themselves.

Buying a home

When you buy your home, most couples will do so in joint tenancy which means that if one dies , the other takes over the ownership of the home automatically, called a right of survivor ship . The house remains out of the estate and  probate is not required for its transfer to the surviving owner meaning you pay less probate or death taxes as a result.

Without joint tenancy, you have tenancy-in-common which doesn’t provide a right of survivorship. The half of a house owned by a deceased tenant-in-common falls into the deceased’s estate, where it’s subject to creditors, claims and delays.

Saving for retirement

Savings plans for retirement should start early in life. Investors should consider how these assets will be handled in probate. Plans in some situations can be transferred to spouses tax free. In the early years when you do not have a lot of savings, many people will take out insurance coverage to protect their families should something happen to them.

Buying life insurance

Leaving a life insurance policy to a spouse directly also keeps the insurance proceeds out of the estate. This ensures that there are funds in the spouse’s hands no matter what is going on in the estate. This is better for the spouse. On the other hand, there are excellent reasons to name the estate as the beneficiary of a life insurance policy. The main benefit is that it provides cash in the estate that can be used for paying taxes. Or paying debts (such as paying off the mortgage on the couple’s home).

Life insurance can also be used to provide money that can be distributed to one of the children. For example, the deceased was leaving his or her major asset – a business or farm, for example – to one child. If they didn’t have enough assets to give a similar amount to another child. Another use of life insurance is to create funds for holding a property such as a cottage in trust.

Life insurance is much cheaper at younger ages than it is when people are older. Young people should consider the various ways that life insurance can be used to their advantage. It can replace income. It can pay out a mortgage, leaving the widowed spouse with clear title to the home. Also it can provide funds to leave in trust for the children. It can provide cash flow to be used to pay taxes and expenses.

Starting a business

Finally, young people are tying up a great deal of time, effort and capital in a business. They must plan right from the start to protect their families in the event they pass away prematurely. If the business is incorporated and there are other shareholders, there should be a buy-sell agreement put into place. It should clearly states what happens to the shares of a deceased shareholder. Often the agreement provides that the other shareholders will buy back the shares. In a fledgling company (and often in more established ones, for that matter), this probably means that a life insurance policy owned by the company will be taken out on the shareholder’s life.

Start your planning today. Talk to a financial adviser and assess what your next steps should be. Enable a high quality of life during retirement as well as a high quality of life for your family should something happen to you.