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Life Insurance: Should It Be Part of Your Retirement Plan?

Picture of Randall E. White

Randall E. White

retirement plan life insurance

Retirement is a time when many people begin to think more seriously about their legacy and what they want to leave behind for their loved ones. Life insurance can be a crucial part of that legacy, as it allows you to provide financial security for your loved ones after you pass away. Of course, planning for retirement can feel like a daunting task, and many people struggle to determine whether – and how – they should utilize a tool like life insurance.

If you’re interested in incorporating life insurance into your retirement plans, read on to learn more.

Understanding the Different Types of Life Insurance

There are two main types of life insurance: term life insurance and permanent life insurance. Term life insurance provides coverage for a specific period of time, typically between one and 30 years. If you pass away during the term of the policy, your beneficiaries will receive a death benefit. If you outlive the term of the policy, the coverage expires and there is no payout. Term policies often come with very affordable premiums.

Permanent life insurance, on the other hand, provides coverage for your entire life. As long as you continue to pay your premiums, your beneficiaries will receive a death benefit when you pass away. Permanent life insurance policies also accumulate cash value over time, which you can borrow against or use to pay your premiums (which are typically more costly than term life policies).


Consider Your Retirement Income Needs

When you’re planning for retirement, it’s important to consider your income needs. How much income will you need to maintain your standard of living? How much will you need to cover your expenses, such as housing, food, and healthcare? And, importantly, how much will you need to leave behind for your loved ones?

You’ll want to keep these questions in mind as you determine whether you need life insurance and, if so, which policy and what kind of coverage is best for your family. The right policy will give your loved ones the ability to continue to live the lifestyle they’re accustomed to, even after you’re gone.

Think About Your Estate Planning Needs

As you consider how you’ll be using your assets in retirement, it’s also a smart time to begin your estate planning, if you have not yet done so. Since estate planning involves creating a plan for how your assets will be distributed after you pass away, life insurance can be an important tool in helping you to provide for your loved ones. It can give them financial security and peace of mind, and you can feel confident in the knowledge that they will be provided for.

If you have a large estate and are concerned about estate taxes, life insurance can be used to provide liquidity to pay estate taxes. This might allow your heirs to inherit your assets without having to sell them to meet a tax obligation.

Consider Your Health

Since life insurance premiums are based in part on your health and age, you’ll want to take your health into consideration as you’re planning a life insurance strategy. If you’re in relatively good health, you may be able to secure a lower premium for your life insurance policy. On the other hand, if you have chronic health issues, you may have to pay a higher premium.

It’s also important to consider your health when deciding between term life insurance and permanent life insurance. If you’re in good health, you may be able to secure a longer-term policy at a lower premium. If you have health issues, permanent life insurance may be a better option, as it provides coverage for your entire life regardless of your health.


Consult With a Professional

When it comes to fitting life insurance into your retirement plan, it may be beneficial to get professional advice. A financial advisor can help you understand all of your options and choose the right type of life insurance for your unique needs. They can also help you determine how much coverage you need based on your income needs and the future needs of your beneficiaries.

In addition to a financial advisor, you may also want to consult with an estate planning attorney. They can help you create a plan for how your assets will be distributed after you pass away and guide you in structuring a life insurance policy in a way that aligns with your estate planning goals.

Fitting Life Insurance into Your Retirement Plan

Incorporating life insurance into your retirement plans can be one way in which your legacy lives on and your loved ones are provided for after you pass. By understanding the different types of life insurance, considering your retirement income and estate planning needs, thinking about your health, and seeking professional advice, you can make an informed decision about how to fit life insurance into your retirement plan.

If you’re planning for retirement and you’re curious about how life insurance may fit into those plans, please contact us today. At TriCapital Wealth Management, we can help you work through your options so that you feel empowered to build a financial plan that serves your needs now and into the future. We look forward to hearing from you!

Securities offered through Triad Advisors, LLC, member FINRA/SPIC. Advisory services offered through TriCapital Wealth Management, Inc. TriCapital Wealth Management, Inc. is not affiliated with Triad Advisors, LLC.

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