If you’re approaching retirement and have significant savings, investments and no debt, you may be wondering why you should keep your life insurance policy. A recent article on WealthManagement.com discussed this issue and provided the following reasons why you shouldn’t let a life insurance policy lapse:
- It’s a safe investment – While you may have funds invested in the stock market, there is no guarantee that their value will increase. With a life insurance policy, you will know the exact amount that your beneficiaries will receive and be able to make financial plans based on that figure.
- It may benefit your descendants – Even if your children are financially independent, a life insurance payout may help them with unexpected expenses or their children’s college tuition.
- You can borrow against it – If you find yourself in a bind, you may be able to borrow against the value of a whole life insurance policy. It is important to remember, however, that this will reduce your death benefit.
- You can support your favorite charity – If you have the intention of leaving a large sum of money to a charity after your death, you may want to consider naming it as the beneficiary of your life insurance policy.
- An unexpected event may reduce your retirement income – If you intend on a large proportion of your retirement income to come from Social Security or employee pension benefits, you should be aware of how this income will change if you or your spouse passes away. The survivor will only receive the higher of the two Social Security checks, and pension benefits may be completely eliminated depending on the rules of the policy. Life insurance can come in handy to make up this deficit.