Social Security, Pensions, Retirement Savings: Can you rely on these?
If you’re in your senior years, you might think that the time to benefit from life insurance has passed.
After all, many people assume life insurance is for young breadwinners who want to provide for their family if they die early.
Did you know that life insurance can provide your loved one with a source of retirement income?
Unfortunately, social security and even money from your retirement savings account might not be enough.
Understanding Social Security Survivor Benefits
Social security payments can be complicated, especially for surviving spouses. Your widow or widower can collect either his or her benefits or yours, whichever is higher. However, your spouse must be full retirement age to do so. This is currently age 66 for people born between 1945 and 1956, but the minimum age will gradually increase.
Your surviving spouse receives only one social security payment, not the two that you would receive as a couple while both living. Your husband or wife can’t collect your full social security benefits before retirement age except in a few unique circumstances.
Is Your Spouse Entitled to Your Pension?
It’s becoming more uncommon for employers to offer pensions. Even if you’re lucky enough to have one, you may not understand what happens to it when you die.
Pensions usually allow you to select from one of two options. The first is a set monthly payout based on your life expectancy. The second is a joint and survivor benefit option. This provides a smaller payout because the pension holder assumes one of you could live a long lifespan. Payouts can range from 50 to 100 percent of the pension value, but sometimes less.
Post-Retirement Healthcare Costs
It’s no secret that older people have greater medical expenses than younger people do. Your spouse could face large bills even with Medicare and a supplemental insurance plan. After you pass away, he or she must pay your final medical costs as well. Healthcare costs can be a big burden for someone on a fixed income. A life insurance payout can help your spouse manage these costs after you have passed away and there’s only one income to rely on.
Will Your Spouse Have to Return to Work?
Even if your loved one has already retired, they may have to get a job to make ends meet after your death. Think about how hard you have both worked to enjoy a more carefree lifestyle during your retirement years.
Your Life Insurance Options
You basically have two choices when you buy a life insurance policy. You can buy term life insurance or permanent life insurance*. Both have their benefits and drawbacks, and you need to meet with an insurance professional to discuss your budget and your needs. One main point to keep in mind, the younger you are and the healthier you are, the less expensive your insurance will be. So if you are considering purchasing life insurance as retirement income for your loved one, buy it as soon as you can.
One of the most loving things you can do is take out a life insurance policy that provides additional income for your loved one in retirement.
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Asurea offers Life Insurance, Mortgage Protection Life Insurance, Medicare Supplement Insurance, Final Expense Insurance, Disability Insurance, Long-term Care Insurance, Retirement Planning products and more. For additional information, click on the ‘Learn More’ button below. Want to have articles just like this delivered to your inbox? Just enter your email address in the box below and click ‘Subscribe.’
This information is provided for general consumer educational purposes and is not intended to provide legal, tax or investment advice. Loans borrowed from your life insurance policy will accrue interest. An outstanding loan balance (loan plus interest) will be deducted from the death benefit at the time of claim.
*Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage, and will reduce the death benefit and policy values. Dollar amounts are for illustrative purposes, not actual.
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