If you’re in your sixties or older, you may wonder if you still need life insurance. After all, your kids are probably grown and out of the house, and they may have children of their own. How can life insurance help you in this stage of life? After all, isn’t it geared toward younger couples with children? Is this something you really need?
Actually, life insurance is beneficial at any age.
Here are six surprising perks to life insurance that you should consider—and are good reasons to hold onto your policy. Remember, insurance is still a helpful tool, even in the later stages of life.
Benefit #1 — Your loved ones can maintain their current standard of living.Did you know 10 million homeowners ages 65 and over are still paying off their mortgages? These days, homes can be incredibly expensive. If you still have a mortgage to pay, your loved ones may struggle to stay in their home. This can include spouses and partners, or adult children who live with you. As of July 2022, half of young adults ages 18-29 were still living with their aging parents. This is the largest group of adult children living at home since the Great Depression.
Remember, your retirement plan may not be enough to comfortably cover the costs of a mortgage, utilities, daily life expenses, and health care bills. But with life insurance, you can protect your loved ones financially and help them maintain their current standard of living.
Losing a loved one is hard enough emotionally and financially. But moving to a new home and scaling back on your day-to-day budget is more added stress. Life insurance can help curb these changes and offer peace of mind.
Benefit #2 — Your loved ones can cover your final expenses.
For many people, a celebration of life or funeral is important. But, as of 2021, the average cost of a funeral with a viewing and burial was $7,848, up 6.6% from 2016. It’s costly, to say the least.
The good news is your life insurance policy can help pay for these expenses. In general, a death benefit can help cover the costs of:
Trust us, end-of-life expenses add up, but they can be well worth the cost too. Funerals and other types of services can give your family members much-needed closure and a chance to celebrate your life. With a life insurance policy, you can give them to the chance to hold this special event and carry out your final wishes.
Benefit #3 — Your loved ones usually won't pay extra taxes on the benefit.
If you have a term life policy, Uncle Sam will probably give your loved ones a tax break on the benefits they receive. This means, your beneficiaries don’t have to report the income they get from a death benefit. Instead, they can focus on spending the money in the ways you desired.
That said, if you have a whole life policy, or another type of policy that accumulates a cash value, you may have to pay report the interest that is earned. If you have questions about taxable income and your life insurance policy, it’s always best to talk to an accounting professional. They can help explain how your whole life policy might impact your taxes, if at all.
Benefit #4 — Pay off outstanding debt.
You’ve already considered the mortgage, but do you have other outstanding debts? Consider your credit cards, auto loans, personal loans, and even student loans. About 73% of Americans pass away with outstanding debt, and the average balance left behind is a whopping $61,554.
Chances are, you don’t want to burden your loved ones with your debt. Purchasing life insurance now is a gift to them. They can use the funds toward bills you may not have been able to pay off.
Debt can be a major source of stress; don’t saddle your family, whether it’s a spouse, partner, or adult children, with unpaid debt.
Benefit #5 — Fund future college educations.
One of the greatest gifts you can leave your children and grandchildren is the gift of higher education. It can help them advance their careers and broaden their minds.
Unfortunately, college today is costly. According to recent data from CollegeBoard, the average yearly tuition for a public-four-year college is $10,740 (for in-state students) and $27,560 (for out-of-state students).
If you have a life insurance policy however, you can leave your children or grandchildren a legacy to help pay for college. This can relieve them from student loan debt, and also help them jumpstart a career and financial future. It’s just another way, you can show your family and loved ones how much you care, even after you pass away.
Benefit #6 — Supplement your retirement savings.
If you’re retired, you may already be using your 401(k) funds, as well as social security benefits. So, what else could you need financially?
Remember, as you age, you may face unexpected costs that drain your savings accounts. Long-term healthcare services and nursing homes are costly, so it’s important to ask yourself, “Do I really have enough?” A life insurance policy is a tax-free way to supplement your life savings, so you can help pay for the unexpected costs that arise with age.
Some policies even offer a living benefit or rider, which can help cover the costs of long-term health care services or hospice care if you are terminally ill. Ask a licensed insurance professional if these are options available to you.
In addition, life insurance can pay for your spouse or partner’s long-term care after you pass away. If you have an adult child who is disabled, you can help ensure their health care and housing as well. Overall, it’s important to look ahead at your family, their unique needs, and then make sure you can support them financially, no matter what happens.
If you have questions about your life insurance policy and the many ways it can support you, talk to one of our insurance professionals. We’re here to help explain any questions you may have.