There are many benefits that come with life insurance for retirees. These include cash value, protection against inflation, paying off debts, and replacing lost income.
If the policyholder dies prematurely, it replaces lost income.
This isn’t a sales pitch, but rather an informative guide to the world of insurance. Having said that, the best place to start is with your insurer. You should also be aware of the myriad pitfalls that can plague the average policy holder. The plight of the eminently oblivious is often averted with the proper measures in hand. Likewise, it is no small feat to keep your policy in check in the face of some good old-fashioned boozing. Taking a more active role in the policymaking process is the key to unlocking this golden egg. Lastly, you should do a comprehensive review of your current policies to be sure that you haven’t overlooked anything important.
pays off debts
A recent study by Experian claims the average Baby Boomer household has a sizable debt load. The same study indicates your tally trumps that of your millennial counterparts. So, is a credit card or home equity loan the way to go? If the latter is in the cards, you should be a bit more selective about who you give your hard-earned money to. Fortunately, there are ways to make your money go further in the long run. One such solution is to shop around for the lowest rates available. By shopping around, you may be surprised at how much you can save on your mortgage payments. It’s also a good idea to take advantage of the free loan counselling offered by your local bank or credit union. As a result, you should be able to whittle your balance down to a healthy balance in no time at all. Getting out of debt should be high on your to-do list.
provides cash value.
Cash-value life insurance is a good way to supplement your retirement plan. The advantage of using this type of life insurance is that the cash value of your policy accumulates tax-deferred. That means that the more money you put into it, the more you will have when you retire.
Life insurance cash value can be used to pay premiums on your policy, buy a house, or pay college costs tax-free. In addition, you can leave your cash value to your heirs.
You can also use the funds to increase your policy’s death benefit. This is a great financial tool for those who want to have a big nest egg but don’t have enough money to afford to purchase a whole life policy.
However, this type of life insurance can be expensive. Premiums may be higher than with regular life insurance, and you may have to pay a fee or surrender charge.
When you die, your beneficiaries will receive a certain amount of money based on the premiums you’ve paid. This is the death benefit.
protects against inflation
If you’re retiring soon and plan to maintain your standard of living, you may want to consider ways to protect against inflation. A number of different options are available, including life insurance policies with a cost-of-living rider or annuities.
The Consumer Price Index (CPI) is a widely used measure of inflation. It’s up 5.4% in July, the highest inflation rate in almost 13 years. And if inflation continues to rise, the purchasing power of your savings could decrease.
For people retiring on a fixed income, the prospect of losing their buying power is very real. That’s why annuities are such a useful tool for protecting against inflation.
In annuities, you get a fixed payment each month for the rest of your life, regardless of the inflation rate. Using this approach, you can focus on maintaining your lifestyle. However, you’ll lose a small amount of purchasing power each year as inflation increases.
Another option is to set up an automatic cost-of-living provision on your policy. You will receive a fixed percentage increase in your payment each year, based on changes to the CPI. But this isn’t always the most convenient solution.
