5 Reasons Retirees May Want to Keep a Life Insurance Policy

10:30 pm Estate Planning, Retirement Planning

life insurance 5 Reasons Retirees May Want to Keep a Life Insurance PolicyThe kids are grown and gone and you’re now retired.  So you may wonder if you still need that cash-value life insurance policy you purchased awhile ago.  A recent WealthManagement.com article provides these 5 reasons why you might want to hang on to that policy:

1.  Surviving spouse safety net.  When one of you dies, the surviving spouse may lose or face the reduction of important income sources like a company pension.  Or maybe you have been spending more than you thought you would in retirement.  Either way, the life insurance proceeds can provide an important safety net for a surviving spouse.

2.  Tax-free inheritance.  Inherited life insurance policy proceeds are tax-free, and can also add flexibility and liquidity to an estate that may need it.

3.  Gifting.  Naming a charity as both the owner and the beneficiary of your life insurance policy could allow you to deduct the cash value of the policy or the amount paid in premiums (whichever is less) to cut taxes.

4.  Investment tool.  Older policies may still be paying three percent or more annually, which is an attractive rate today.

5.  Borrowing leverage.  Policy holders may want to borrow against the accumulated cash value of the policy.  This type of loan is generally tax-free, and no application or approval process is necessary.

Life insurance is just one estate planning tool in an arsenal that can help you provide for your family’s future and secure your own.  Contact our Orange County law firm to learn more.

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