How to Use Life Insurance for Retirement
The older we get, the more we start thinking about life insurance. After all, after we’re gone, we want to make sure our families have the money they need to live as comfortable as possible. But, the type of life insurance policy you choose can either help or hurt your retirement.
Here, Schnitzer-Slate shares some advice that can help you protect your retirement and/or your family in the event that you pass away before you reach it.
Choose Term Life Insurance
Life insurance policies are available in either term-life or whole-life. When it comes to protecting your retirement, term-life offers the best balance of benefits vs affordability.
Whole-life policies are very, very expensive, often costing more than $1,000 a month in most cases. But, a 20-year term-life plan with a $1 million benefit can cost just over that amount for a full year of coverage, thus leaving a lot of money left over that can be put to better use. It’s important to note that the earlier you buy your policy, the less money your premium is going to be and if you wait until after you’re 65, your odds of getting a life insurance policy at all will be slim, so start shopping early!
Plus, term-life payments are fixed, so you know every month exactly how much money you’re paying out or your coverage. The amount stays the same regardless of how long you keep your policy, and your policy can never be cancelled as long as you’re making your payments on time.
Use the Remaining Money to Create an Emergency Fund
If you’re nearing retirement, then having an emergency fund is crucial. In most cases, this fund should hold between three and six months’ worth of your household expenses. If you have a profession where your income varies, then an emergency fund is even more important. The reason this fund is so important is that it provides a safety net during times where your income dips or when a major life disturbance, such as your car breaking down, occurs. It helps protect your finances and helps save you from taking on too much debt.
By going with term-life insurance over whole-life, you can take the money you’re saving and invest a portion of it into building an emergency fund.
Choose Long-Term Disability Insurance to Protect Your Income
If you don’t have an income, it’s going to be impossible to save for retirement. Therefore, you need to protect your income by having a long-term disability policy. This will help ensure you still have money coming in in the event that you suffer an injury or illness that keeps you out of work for an extended period of time. Because you chose term-life, your disability insurance premium will also be able to be covered using the funds you saved from not picking whole-life insurance.
Invest the Remainder in Well-Diversified Portfolio
Most permanent life insurance policies accumulates savings that can be cashed in and invested. But, by choosing a term policy and investing the money yourself, you’ll have greater control over what you invest in and better potential for earning higher returns. You’ll also avoid having to pay high policy fees and agent commissions commonly found with permanent life insurance and even more importantly, the performance of your investment won’t be impacted by the financial status of your life insurance company.
Don’t Risk Your Retirement – Plan for Retirement Insurance in Wilmington NC
Your retirement will creep up on you and you’ll feel as if it came out of nowhere. Don’t take this for granted. Take the necessary steps now to secure your income and protect your family.
Here, Schnitzer-Slate shares some advice that can help you protect your retirement and/or your family in the event that you pass away before you reach it.
Choose Term Life Insurance
Life insurance policies are available in either term-life or whole-life. When it comes to protecting your retirement, term-life offers the best balance of benefits vs affordability.
Whole-life policies are very, very expensive, often costing more than $1,000 a month in most cases. But, a 20-year term-life plan with a $1 million benefit can cost just over that amount for a full year of coverage, thus leaving a lot of money left over that can be put to better use. It’s important to note that the earlier you buy your policy, the less money your premium is going to be and if you wait until after you’re 65, your odds of getting a life insurance policy at all will be slim, so start shopping early!
Plus, term-life payments are fixed, so you know every month exactly how much money you’re paying out or your coverage. The amount stays the same regardless of how long you keep your policy, and your policy can never be cancelled as long as you’re making your payments on time.
Use the Remaining Money to Create an Emergency Fund
If you’re nearing retirement, then having an emergency fund is crucial. In most cases, this fund should hold between three and six months’ worth of your household expenses. If you have a profession where your income varies, then an emergency fund is even more important. The reason this fund is so important is that it provides a safety net during times where your income dips or when a major life disturbance, such as your car breaking down, occurs. It helps protect your finances and helps save you from taking on too much debt.
By going with term-life insurance over whole-life, you can take the money you’re saving and invest a portion of it into building an emergency fund.
Choose Long-Term Disability Insurance to Protect Your Income
If you don’t have an income, it’s going to be impossible to save for retirement. Therefore, you need to protect your income by having a long-term disability policy. This will help ensure you still have money coming in in the event that you suffer an injury or illness that keeps you out of work for an extended period of time. Because you chose term-life, your disability insurance premium will also be able to be covered using the funds you saved from not picking whole-life insurance.
Invest the Remainder in Well-Diversified Portfolio
Most permanent life insurance policies accumulates savings that can be cashed in and invested. But, by choosing a term policy and investing the money yourself, you’ll have greater control over what you invest in and better potential for earning higher returns. You’ll also avoid having to pay high policy fees and agent commissions commonly found with permanent life insurance and even more importantly, the performance of your investment won’t be impacted by the financial status of your life insurance company.
Don’t Risk Your Retirement – Plan for Retirement Insurance in Wilmington NC
Your retirement will creep up on you and you’ll feel as if it came out of nowhere. Don’t take this for granted. Take the necessary steps now to secure your income and protect your family.