Life Insurance is Not Just for the Young

Congress has declared September – Life Insurance Awareness Month.  So why would I be writing about life insurance in a blog about retirement – isn’t life insurance just for those with young kids?  In the not so distant past, the answer may have generally been yes – but today the answer is no!

Life insurance does play a very important role in planning for the financial risks associated with younger couples.  Meaning young couples have many financial risks which can be address very easily and inexpensively through the use of life insurance.  These risks include loss of one spouses income, lump sum to help fund college expenses for young children or even a lump sum to pay off or down a mortgage.

BUT since we are all living longer, there are new longevity risks which can be mitigated through proper life insurance planning.    

These risks include not only the typical such as loss of a spouse’s income, but also the ability to provide a lump sum to help offset the costs of long-term care for the surviving spouse, lump sum funding for a grandchild with special needs or even a lump sum to assist with education costs of grandchildren.

Here is how the scenario plays out for the risks associated with long-term care expenses…

  • A husband and wife are in their mid 60′s and 70′s and they are starting to draw down on their retirement assets.
  • One spouse, needs some long-term care assistance.  So now the couple is not only drawing down on their retirement assets to fund retirement needs, but they are also drawing down an additional $2500+ per month to pay for part-time or full-time home health care assistance.
  • As that spouse needs more care, the costs increase dramatically which causes further drawing down on retirement savings.  The accelerated draw down rate may even result in the need to obtain a reverse mortgage in order to fund the long-term care expenses of one spouse.
  • Eventually the ill spouse passes.  The surviving spouse may still need to draw down on the retirement savings for another five to ten plus years and may even have their own long-term care expenses which need to be paid.  THIS IS WHERE LIFE INSURANCE COMES INTO PLAY!  IF THE SPOUSE WHO PASSED FIRST HAD LIFE INSURANCE THEN THE LUMP SUM COULD REPLENISH THE SURVIVING SPOUSE’S RETIREMENT ASSETS!

You can take a look at my website  www.michaelginsberg.com for interesting calculators and articles about life insurance.  To save some search time, here are some further links to articles about life insurance which you may find valuable:

If you can see how this risk may apply to you – I would be happy to review your needs.  Let’s “celebrate” Life Insurance Awareness Month together – call me for a life insurance review today.  If you would like to watch the video sponsored by the LIFE Foundation highlighting this year’s life insurance story, click here.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®