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.