Using Life Insurance in Retirement Planning

Many consumers think that life insurance is best used to protect their family financially during their working years. In the event of an unexpected death,  the spouse and children will have money to maintain their standard of life. However, life insurance should be considered an important element of retirement planning. Instead of ending it, clients need to understand how to repurpose life insurance to serve retirement goals. To stay current on the different uses of life insurance as part of retirement planning, financial advisors should pursue courses offered by The American College of Financial Services. Here are a few insights now.

More Secure Retirement

One of the main concerns for future retirees is outlining a plan that keeps them comfortable through their golden years. Higher-income earners who have maxed out contributions to other qualifying plans may be able to use life insurance to increase retirement income. Clients may be particularly excited to learn that certain life insurance plans provide an opportunity to delay receiving Social Security benefits until they are older. This increases their monthly Social Security payout, all while providing additional peace of mind concerning retirement.

Security for Family

Ensuring that a specific amount of money will be available to family, even if other retirement funds are depleted when they pass away, is an appealing aspect of life insurance. Life insurance offers death benefits at affordable prices. So, instead of hoarding money to ensure they leave an inheritance, retirees can spend their savings on what they want without guilt. Through a simple investment in a life insurance plan, clients can ensure funds will be there for their family to cover final expenses and more.

Retirement Flexibility

Many clients are counting down toward the day that they can retire. However, many people find themselves in a "Catch-22" scenario of whether they are wealthy enough to retire early or can wait until they turn 59.5 or older to take full advantage of Social Security. Life insurance can actually provide a way to fund early retirement years. Educate your clients on the benefits of life insurance plans that offer opportunities to access the policy's cash value through tax-free loans and partial withdrawals. Instead of worrying about money, they can begin an early retirement that probably would not have been possible without life insurance.

Maintain Standards of Living

Ask clients to consider using money just sitting in a low interest bank account to invest in a long-term disability life insurance plan. Many retirees may not realize how difficult it actually is to receive disability benefits from Social Security or how little they might actually receive. With comprehensive coverage through an any-occupation policy, your client won't have to take a menial job later in life if a disability prevents him/her from performing a higher paying position as this policy can replace much of their lost income.

To find out more about the benefits of life insurance for clients and CLU® courses for advisors, be sure to request more information!