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Should You Hang on to a Life Insurance Policy After Retirement?

Retirees are always looking for ways to cut expenses, and one expense that is often eliminated once retirement kicks in is the life insurance policy. After all, neither of you are working now so salaries will not have to be replaced and a surviving spouse will continue to live off the accumulated retirement savings of both.

However, there are some reasons that retirees may want to keep their life insurance policy, including:

Providing a safety net for the surviving spouse. If a pension that plays an important role in your retirement financial picture will disappear upon the death of one spouse, a life insurance policy can provide an important safety net for the surviving spouse.

Tax-free inheritance. Life insurance policy proceeds that are inherited are not subject to taxes and can provide additional flexibility for a surviving spouse.

Deductions. If you name a charitable organization as the owner and beneficiary of your life insurance policy, you can deduct either the cash value or the premiums paid (whichever is lesser) to reduce taxes.

Investment. If you have had your policy for a long time, it could still be paying 3% or more annually, which is an attractive rate these days.

Leverage for borrowing. You can borrow against the cash value of the policy without having to go through the application or approval process. Plus, the loan is usually tax-free.

The Dorcey Law Firm, PLC, focuses on retirement planning and asset protection for Florida residents. Contact our Fort Myers law firm for your free consultation.

Categories: Retirement Planning
dorcey law firm
The Dorcey Law Firm, PLC - Fort Myers Attorney
Located at 10181 Six Mile Cypress Pkwy, Suite C, Fort Myers, FL 33966
Phone: (239) 330-6674
Local Phone: (239) 418-0169