Protect Your Clients Today & Tomorrow
Life insurance is certainly a topic that can stir discussion and debate. It is a conversation that deserves distinction from all other insurance because death is eminent for all of us. Planners take a long view on retirement savings and income planning; but many unfortunately take a short view on life insurance. The value of life insurance has been enhanced by the living benefits many insurers now offer. These plans can be a versatile safety-net to protect your clients today and tomorrow.
When nearing retirement, clients often have the same three fears as they did when in their working prime. The way these events adjust and affect their life in retirement may change the value of life insurance, but it often doesn’t eliminate it.
3 Concerns in Life
- Dying too soon – when you die early in retirement, a spouse might get less income from social security or pensions, and life insurance can offset that loss.
- Living too long/Outliving their savings – life insurance cash value can act as longevity income or the death benefit is a permission slip to annuitize and not disinherit.
- Needing chronic care – this can happen at any age but in retirement the chances are much greater. Having access to tax-free benefits if you need care in retirement helps protect your other assets. Taxable plans invested in the stock market don’t need to be touched because you have tax-free access to cash for care.
The Life Insurance Conversation™
In recent years, more analysis has been conducted about the value of owning some life insurance when you retire.
Your life insurance policy doesn’t have to retire when you do!
This is an article I wrote for NAPFA magazine. Too often people are quick to dismiss owning life insurance because they use an investment filter and believe they will do better in the long run. Life insurance has tax-free benefits and provides liquidity in a time of need. Some might not need life insurance, but I find most will value it. This article discusses how life insurance can play a role in a myriad of different financial circumstances, making it the “Swiss Army Knife” of financial tools.
Integrating whole life insurance into retirement income planning.
Wade Pfau analyzes & takes a long-term view of life insurance. If you have a whole life policy and live long, you can use the policy values to create a longevity hedge of outliving your money. Pfau addresses the value of incorporating whole life and annuities into the retirement planning discussion . . .
“We find substantive evidence that an integrated approach with investments, whole life insurance, and income annuities can provide more efficient retirement outcomes than relying on investments alone. Because whole life insurance can play an important role in producing more efficient retirement outcomes, younger individuals planning for both retirement and life insurance needs may view whole life insurance in a new light as a powerful retirement income planning tool. The conventional wisdom of “buy term and invest the difference” is less effective than many realize when viewed in terms of the risk management needs of a retirement income plan.”
Benefits of integrating insurance products into a retirement plan.
This analysis provided by Ernst & Young concludes: “Integrating insurance products into a financial plan provides value to retirement investors.”
For an overview click here: How life insurers can provide differentiated retirement benefits