Episode 123: Do Retirees Really Need Life Insurance?

Today’s Prep:

Ironically, life insurance is a young man’s game. The perception among many people is that your need for a policy dramatically decreases or become completely unnecessary as you get older. But is that really the case? Today, we’ll explore the ins and outs of life insurance and its various uses when it comes to planning.

(Click the featured times below to jump forward in the episode)

Equipping Points:

Depending on who you ask about life insurance, there’s a good chance you’ll get answers that vary quite a bit. Some people really advocate for including a policy in your portfolio while others believe there are better uses for your money.

The reason why many people don’t like discussing life insurance is because it deals with your own mortality. Having the conversation means you have to think about life when you’re no longer around and most of us don’t enjoy that. Plus, it also means talking about money that you’re spending and likely won’t ever see again personally.

So does it make sense to have life insurance as a retiree? That’s what we want to explore on this episode of the podcast.

To put it as simply as possible, the question to ask is are you going to leave someone with a financial problem when you die and can you fix it economically with life insurance? That won’t always tell you whether you need life insurance but it’s a great starting point.

A client needs to have some sort of insurable interest to determine whether life insurance is something they’ll need. This is easy to do for younger people, especially when they have a spouse or family that needs an estate left behind to help support them but you haven’t had the time to build that estate.

But life insurance can be used for a number of reasons like to replace your longterm care insurance, solve estate tax problems, or to cover a lost pension when you pass away. David will get into those in detail on the show with examples of how that might look in practice.

One tool that David uses to help determine how much insurance you might need is the calculator on Bankrate.com. You can find it here and it will allow you to input some factors to see what they recommend. To get a true look at how life insurance will fit into financial plan, you’ll want to work with a professional to make sure no detail is overlooked.

Listen to the entire episode or use the timestamps below to skip to a particular section.

[1:36] – Perception of life insurance

[2:35] – Why does it get a bad reputation?

[4:07] – Determining whether someone needs it

[5:44] – How much coverage do you need

[7:31] – Other strategic uses for life insurance

[12:15] – How often is David using life insurance for clients?

Today’s Takeaway:

I’m a fan of what it does but, frankly, I don’t like it anymore than anybody else because I don’t like paying premiums for something that I will likely never need. So it’s kind of a complex, emotional bundle.”

– David Dickens

Additional Resources:

PODCAST: How To Claim Social Security Benefits of an Ex-Spouse

PODCAST: What’s Changed with Inherited IRAs?

PODCAST: 4 Steps to Help You Plan Ahead for Taxes in Retirement

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The host: David Dickens

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