Is it ever too late for life insurance?

Many people think life insurance is only for the young. That life insurance is a tool best used by newlyweds with mortgages, parents of young children, and spouses who are both employed. 

But what does that mean for seniors? Does that mean retirees do not need life insurance? The answer to that question depends on your family's needs as well as your financial picture upon retirement.
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Your family's needs

One of the biggest concerns among retirees is whether or not they have enough money set aside to last their entire lives. 

Since life expectancies are predictable, but an actual lifespan is not, retirees are left with an uncertain bet that the amount of money they saved for retirement is enough. 

Sometimes, this bet is funded with a straight life annuity or pension that pays out like a straight life annuity. Both of these instruments could affect the surviving spouse's income if the annuitant or pensioner dies and there is no death benefit. 

When a surviving spouse stands to lose a portion income after the death of his/her spouse, life insurance can provide a much needed source of income to replace the lost amount.

Another consideration is whether or not you would like to use death benefit proceeds to create a trust for your grandchildren. Leaving a trust account for their college or adult years can help take some of the financial burden from your children and your grandchildren as it may allow them to avoid student loans and other debt. 

Funding the trust with life insurance proceeds takes the funding burden off of your spouse and creates a fixed amount for the trust.

Financial planning

Life insurance policies are great tools for making charitable donations after you pass on. 

If your spouse does not need the death benefit proceeds, you can set them up either in a charitable trust or name a charity as your beneficiary. This allows your surviving spouse to see all the good your donation will do, without it impacting his or her financial picture.

Depending on how well-planned your retirement has been, you may accumulate some debt in your later years that can be paid off with the death benefit of your life insurance policy.  

Debt as simple as a car or small home equity loan can cause undue stress to your surviving spouse, and a life insurance death benefit is an easy solution to pay it off.

Another financial planning consideration is estate taxes. While life insurance death benefits are generally not taxable, the rest of your estate may be. 

Instead of forcing your surviving spouse to liquidate assets or take funds from a retirement account to pay estate taxes or income taxes for the year you pass away, why not buy a life insurance policy to fulfill that need?

The takeaway

There are so many different ways that a life insurance policy can improve your surviving spouse's and family's lives, no matter what your age. 
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Without knowing what needs the future will bring, and what health complications could impact your ability to get insurance, the time to buy is now.