Have you ever thought about the fact that the cash or term-value insurance you bought to protect your family could also cushion your retirement? It is quite possible, especially today when you have several insurance companies ready to accept you as one of their valued customers.
Imagine this: you’re 55, 60, or even 62. The kids are already dependent and are somewhere settled down, the mortgage is almost paid off, and before long, you’ll retire and get your pension. What about life insurance? You’re 62, but considering your good health, you can still expect to live another 18-20 years. This is the point when you might think that your house is worth a million dollars. If you drop your insurance policy, you will save hundreds or even thousands of dollars a year!
Nice try, but that’s not the good choice. After the collapse of real estate and crash of stock market, the financial lives of pre-retirees have already become a lot more challenging. You’ll find it hard to borrow against home equity. You’ll find your mortgage payments become more of a burden. And in the midst of all this you’ll see your retirement accounts shrink a bit leaving you with a temptation to continue doing your job and contribute until you get to an age where you can claim your full Social Security Benefit…
The dilemma you’ll be facing is that if you have term life insurance policy that will expire soon, you’ll be confused about whether you should renew it and allow premiums to soar a bit, or drop the coverage and put your family in a financial bind in case you die prematurely. What it means is that if you have cash-value or permanent life insurance, you have several decisions to make. You may be tempted to withdraw money to deal with a tighter budget or a smaller pension, especially if you’re employer forces you to take an early retirement.
Yes, there are many things to consider, but you need to take right steps to ensure that your life insurance policy offers maximum benefits. First of all, make sure you conduct your research before opting for a life insurance policy. If you have a multi-year term policy and extend it without conducting your research, you could be missing several good opportunities to renew it for less than you think; it will help you to keep hold of death benefits (tax-free) that will also compensate for the damage to your pension and retirement funds.
Read more about life insurance terminology here.
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