The Thing Most Often Omitted In Retirement Plans

Most of us assume that once our children are grown and we enter the retirement phase of our life we no longer need life insurance. This is one of the reasons term insurance is often recommended. However, in reality the exact opposite is true. Life insurance can and should be an integral part of retirement planning.

Would you cancel your home insurance once the house is paid off? Do you drop your auto insurance when it hits 100,000 clicks? Is the coverage on your engagement ring no longer necessary after your 25th wedding anniversary? Why then would you eliminate your life insurance after 20 years? It makes no sense to drop your life insurance at the point in your life when it has the most value.

Many erroneously believe that life insurance serves only one purpose … to protect your family in the event of a premature death. They believe that life insurance only benefits those left behind. The beneficiaries of your policy. As a result, they overlook the countless benefits that both the cash value and the death benefit can provide during their lifetime. Life insurance can play a pivotal role throughout your life, especially in your retirement years.

The mistake is in believing that life insurance is only valuable in the event of a premature death and only for surviving beneficiaries. Canadians generally buy term 10 or term 20 coverage assuming they will not need or want the insurance down the road.

But what type of insurance would you rather own? The type that expires before you need it or the type that is guaranteed to be there when you die? The harsh reality is that term life has less than a 95% chance of every paying out because most people cancel the plans when the price starts to increase or it expires before they die.

The life insurance that was originally purchased for the purpose of income replacement can easily be re-purposed to allow the insured to enjoy greater income, and greater income options in retirement. Permanent cash value insurance allows you to be become the de-facto beneficiary of your own policy while you are alive.