Afraid of Outliving Your Money? There’s an Insurance Product for That

9:12 pm Asset Protection

birthday cake e1314738684505 Afraid of Outliving Your Money?  There’s an Insurance Product for ThatYou don’t need to keep a running total of Willard Scott’s Happy Birthday wishes to 100+-year-olds on the Today Show to know that Americans are living longer.  And with longer life spans comes the necessity to be sure your money is around at least as long as you are.

Longevity insurance – where you pay a certain sum to an insurer when you’re in your 60s in exchange for monthly payments 20 or more years down the road – is a lesser known insurance product that is growing in popularity, especially considering potential cuts to Social Security benefits and the absence of pension plans in corporate America these days.

According to the Society of Actuaries, for a relatively healthy 65-year-old couple, chances are 63 percent that one of them will live until the age of 90 and 36 percent that one will make it to 95.  Some financial advisors consider longevity insurance to be a good way to manage the risk of living to a ripe old age.

Longevity insurance is an annuity with a fixed income that kicks in at a specified future age, usually 85.  A recent AP article on this product noted that a “maximum income” version of MetLife’s longevity insurance with a lump sum investment of $100,000 at age 65 would pay a woman a little over $59,000 annually once she reached 85.  A man would receive more – just under $74,000 a year – because men have shorter life spans than women.

Under many longevity insurance policies, if you die before payments begin, your heirs are out of luck.  However, there are alternate versions that guarantee some death benefits to heirs, but they are usually more expensive at the outset.

According to the article, one important caveat to consider is whether you and the insurance company will both be around in 20 years, so it is suggested you find a company with superior ratings from Moody’s, Fitch, Standard & Poor’s and A.M. Best.

Our top rated lawyers can guide you through asset protection strategies and effective estate planning concepts that will meet your unique needs.  Contact us today for a free consultation.

Contact us today and let our Newport Beach law firm help you with all your financial planning needs.

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