The reasons people buy life insurance in their thirties are different than when in their fifties or sixties. Contrary to classic planning “wisdom,” there are a number of reasons to keep and maintain life insurance in a person’s senior years. The reasons, as enumerated herein, go beyond protection into such useful strategies as tax-favored withdrawals and loans from cash value, tax advantaged death benefit to replace a life-only annuity, supplemental retirement income and legacy. Two action items for financial professionals:
1. Perform a life insurance review to consider the right balance between temporary and lifetime needs for death benefit;
2. From that audit and for those consumers with sufficient financial resources—insurance owners should be encouraged to progressively convert their term insurance to whole life insurance, at least for the amounts desired for lifetime coverage to fulfill non-traditional benefits of lifetime life insurance.
Richard M. Weber, MBA, CLU, AEP, is president and principal of The Ethical Edge Inc., a consulting firm providing fee-only analytics and services to insurance firms, family offices and high-net-worth individuals. Weber reviews new and existing policies for policy-holding clients from several dozen of the top carriers.