Life Insurance In Retirement?

Relayer Benefits Group is here to help show you your options. Find out if a roll-over option is available for you. Or, register for one of our upcoming events to learn more about IULs. Tax-free* income, long-term policies, and other benefits could be yours.

Do I Need Life Insurance In Retirement?

You probably have a good understanding of why life insurance is important when you’re still working. However, in retirement, you might not be sure. “Do I need life insurance in retirement?” is a question clients sometimes ask.

Let’s look at why people choose this product before retirement. First, life insurance can be used to provide income if the earner dies. For instance, a policy might help the living spouse or beneficiary maintain the same lifestyle. However, in order to retire, you probably have saved enough to life off without working. So, is life insurance still needed once you reach retirement? The answer is, in some cases, yes.

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Do I Need Life Insurance or Not?

It is possible that you won’t need a life insurance policy when you retire. For instance, if you have all the income you need or don’t need a tax-free* income option. In addition, you may have a whole life policy or other universal life insurance policy already. In these cases, you might have a cash value associated with your policy. If your current strategy suits your needs, then you may not need to look at life insurance in retirement. However, there are several reasons why certain types of life insurance, such as an indexed universal life (IUL) policy can be very beneficial in retirement.

Why Retirees Use an IUL

Because an IUL is not a true investment, the rules are different. Therefore, retirees have more flexibility with this product than some others. For example, IULs do not have contribution limits like 401(k)s or IRAs do. Instead, you can put in as much as you’d like. Also, IULs allow you to take the money out whenever you want to. Unlike traditional retirement accounts that require a minimum withdrawal each year, IUL’s don’t do that. In addition, you could take income from an IUL earlier than you can with most retirement plans. In fact, there is no penalty if you take out money before you are 59 1/2. But, there is a penalty if you do this with a traditional retirement account. No minimum distributions at age 72, either.

Another reason for an IUL is that it’s a safe place for your money. Other conservatice options exist, but an IUL has the added benefit of taking income tax-free.* For some, this offers an additional peace of mind. You can know your money is safe from the market. Yet, it is accessible when you need it.

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