If someone you care about is one of our country’s estimated 75 million baby boomers, there are a few things you should know. Insurance News Net’s article, “How To Use Life Insurance In Better Estate Planning” says that middle-income boomers are carrying more debt into retirement than ever before. That said, life insurance can help provide your surviving family with an income after you die and also be used to pay off debts. The proceeds from life insurance policies can be used to pay down your mortgage and debts. It can also be used to help pay for funerals and other final expenses.
If you have sufficient assets to pay your debt when you pass away, your creditors will receive their payments from your estate. However, be aware that it matters if your home is your primary asset and if your spouse or another family member is a co-applicant or co-signer on an account, because your mortgage and other debts, such as credit card bills or car loans, could become their responsibility.
Carrying debt in retirement is very common today. Life insurance can help provide peace of mind knowing that provision has been made for the comfort and security of your family. Boomers should conduct an inventory of their finances and debt, weigh their options and find a life insurance policy that will help with any potential financial burdens upon death. Let’s look at some tips to help you decide, if purchasing life insurance is right for you:
- What’s your need? Do people depend on you financially? Do you have sufficient funds to cover your final expenses? Consider life insurance to help protect your family’s future. Your policy’s beneficiary can use the money for living expenses or to pay off debts.
- Educate yourself on the different types of life insurance. There are three major types of life insurance coverage—term life, whole life and universal life. All three pay a death benefit, but each can differ in terms of coverage length, premium flexibility, cash value accumulation and distribution.
- Determine the amount of life insurance you need. What amount of coverage would your family need, if something happened to you? What expenses would have to be covered or debts paid off? What amount is earmarked for savings? The answers will help you determine the type and amount of life insurance you’ll need.
- Long term care. Many life insurance policies today come with the added ability to receive benefits to pay for long-term care, including in-home care, assisted living, and nursing home care. These benefits are often crucial, because Medicare does not pay for long-term care.
Reference: Insurance News Net (January 7, 2019) “How To Use Life Insurance In Better Estate Planning”
Suggested Key Terms: Estate Planning, Joint Tenancy, Life Insurance