Posts

I’m All Set to Retire: Do I Really Need That Life Insurance Policy Anymore?

/0 Comments/in , , /by

Each of us has a different vision of what retirement will look like. Some plan to travel, while others hope to volunteer in their community or spend more time with family. You’ve spent all these years focusing on building a nest egg for your later years, it’s time to sit back and reap the rewards. For many, this means doing away with their life insurance policies. After all, there’s little to no income to replace should you pass on and your dependents are out of the house, right?

In many instances, this is true. However, what you do with your life insurance policy should be carefully considered before making any rash decisions. Let’s look at a few questions you should ask yourself when considering your options.

Have You Considered Estate Planning?

When a family member dies, those left behind are often left with a great deal of expenses – funeral costs and federal and state estate/inheritance taxes leave some heirs scrambling to sell off assets.

For individuals whose goal is liquidity, a life insurance policy such as an irrevocable life insurance trust can prove beneficial. The policy cannot be modified, revoked, or terminated for as long as you’re alive. Upon your death, proceeds are protected against creditors and estate taxation.

If this is something you’re considering, be sure to seek the guidance of an experienced life insurance agent or financial advisor.

Are You Still in Debt or Working?

Many consumers reach retirement age and are still in debt. Whether it be from failed business ventures, credit cards, or mortgage, this outstanding debt will still need to be paid once you pass away. Retirees who are still facing outstanding debt should consider their life insurance options. A guaranteed level-premium term life policy is a great way to protect your family against a mountain of debt upon your death.

Again, be sure to speak with a licensed professional before making any changes to your current policy, or committing to a new one.

Do You Have a Disabled Child or Other Dependent?

A retiree whose children are out of the home and spouse is self-sufficient might not have a need to continue their life insurance. However, if you have a special needs family member, their care after your death should be a consideration. Additionally, will your spouse lose a significant amount of your pension or other monthly income? If so, a life policy can help fill that gap.

Do You Wish to Leave a Charitable Legacy?

While consumers often choose to make annual donations to a charitable organization, many are now realizing the benefits of leaving a charitable legacy in the form of life insurance. When structured properly, your gift can benefit both you and the recipient, at a lower out-of-pocket cost to you.

Do You Own Your Own Business?

Business owners have a responsibility to more than just their family. They have employees and business partners to consider and, for many, their death could have a significant impact on those left behind. If you’re unfamiliar with key man life insurance, visit our blog for more details regarding this critical business tool.

As you approach the finishing line for your retirement planning, it’s important that you have the full picture regarding where you stand financially. Ask yourself:

  • What sources of income will I/we be reliant on?
  • What are our outstanding debts, including a mortgage?
  • Am I in good health? How is my spouse?
  • Who is dependent upon me and how?

Many view life insurance after retirement counterproductive, until they’ve considered these questions. While it may not be a necessary investment, you owe it to your loved ones to take a moment to examine your situation from every angle. And do not ever cancel an existing insurance policy without speaking with an insurance representative first.

Key Man Life Insurance: What Is It and Who Needs It?

/0 Comments/in , , , /by

Often, the difference between successful and unsuccessful businesses can come down to the determination and vision, as well as financial backing, of primary individuals within the company. These individuals become key to the success of the company, as a whole. But, what happens if that person suddenly and unexpectedly dies? A crew without a captain will sail off course, if they aren’t unified in a plan of succession.

Morbid as it may be, it is a fact of life and an unavoidable topic for businesses. Although you can never replace a “key man” you can propel their life’s work to greater heights through insured financial support and agreed-upon courses of action. Still, none of this will miraculously occur without careful planning and frank discussions with all invested parties. Let’s explore some of the FAQs of this type of insurance to see if your business is a likely candidate and what steps you can begin to take to secure your legacy.

Which Businesses Benefit From This Kind of Coverage?

By and large, small and developing businesses are the most likely candidates, as much of their revenue may be tied to their growth and expansion, whereas established businesses may have insulated themselves for the potential of a key man loss. Small business models often rely on re-investment, both financially and individually as part of their winning strategy. They are dependent on certain individuals and their contributions to make the machine operate correctly.

How Does the Coverage Work and How Much Is Needed?

Just like most insurance, a policy is acquired, the premium is paid and, if the policyholder passes, the company collects and is hopefully given a lifeline to manage the loss of their key person. Which brings us to the question of how much insurance is needed. For most businesses, the worth of a key man needs to be assessed, based on how much they add to the company, as a whole. Therefore, the more key they are, the more coverage the company should purchase. And don’t just consider what they bring to the company, but what the company would need to survive, if this person was suddenly lost. Overall business debt, investors’ returns and employee retention are some of the most common concerns and questions businesses purchasing this insurance will discuss.

What Are the Potential Drawbacks?

Overall, key man life insurance is an excellent safety net for smaller businesses, but there are some potential disadvantages to be considered. or instance, premiums aren’t tax deductible and, when a key person passes, creditors could make a claim to the premium pay out. In addition, if a key man leaves a business, their coverage can’t travel to their new business. However, there are some options becoming available to alleviate the potential of wasted premium payments. Talk to an agent today to see what your business’ options might look like.

Key man insurance is an excellent way to safeguard your small or medium-sized business from the catastrophic loss of a vital member of the business. It may be something that people avoid discussing because of the sensitive nature of the decisions, but it is much less comfortable or possible, when an actual loss occurs. Have these discussions and make rational decisions when all parties can contribute and develop a plan for the near and distant future of your company.