How Do Life Events Affect My Insurance Needs?
Retirement
At retirement, your lifestyle
changes. Your cash needs will likely change (or shift) as well. You
may now be in a lower income tax bracket. You may find that you spend
less on transportation and clothing, or more on vacations and greens
fees. Your existing life insurance coverage was calculated based on
conditions before your retirement and may have included:
Income replacement
Mortgage on your primary residence
Children's education fund
Fulfillment of retirement cash needs
Estate planning goals
Retirement is a good time to reassess your life insurance needs and
existing coverage to make sure they accurately reflect your new stage
in life.
You may no longer be concerned with replacing
an income stream that no longer exists, coverage for a home mortgage
that has been paid off, or providing educational funds for children
who are now finished with school and on their own. You may be more focused
on providing for your grandchildren (or great-grandchildren), which
may affect the choices you make about your life insurance coverage while
in retirement. If you will be leaving a large estate when you die, your
heirs may be stuck paying a hefty estate tax bill.
Existing coverage
You may have existing life insurance coverage from more than one source,
which could include:
Employer-sponsored group life insurance
Life insurance coverage under your previous employer's group plan may
terminate at your retirement. Some plans offer a buyout option, where
you can continue the coverage by paying the premiums yourself. Check
with your company's benefits director.
Employer-sponsored split dollar agreement
If you and your employer engaged in a split dollar arrangement, the
agreement between you and the company should specify the treatment of
the policy at your retirement. There are many different ways to structure
split dollar life insurance agreements, so your options will depend
on how your plan was initially structured. Check your agreement, and
consult your company's benefits director.
Individual cash value life insurance
You may have bought cash value life insurance as part of your overall
retirement plan. If you plan to use the cash values as part of your
income during retirement, you should check on your cash value balances
and the tax consequences related to accessing your cash values. Weigh
the tax effect of accessing different sources of retirement income to
maximize your savings and minimize your taxes.
Individual term life insurance
You may own term life insurance. Your policy will indicate the age at
which coverage ends. You may be faced with a decision whether to continue
the coverage.
Beneficiary designations
You should review your beneficiary designations on your insurance policies
as well as any employer-sponsored retirement plans, annuities, or IRAs.
This is something you may want to do periodically, especially if your
extended family is growing and you are naming grandchildren (or great-grandchildren)
as beneficiaries.
Other Life Stages
single
|
married |
new baby
|family
|
dependent parents
| retirement
