Do you need life insurance when you retire?

Once you turn 65 and retire, you do not need life insurance, right? Not so fast!

The traditional thinking about life insurance is that you need only when you have an income to protect, when you have a mortgage or when you have children.

And while it is true that having life insurance after 65 years is not right for everyone, there are some good reasons why you might want to consider.

1. Complete your retirement income. If you have an existing permanent life insurance policy, for example, you may be able to tap into the accumulated cash value as a form of retirement income. You can integrate the funds inside your permanent life insurance policy to supplement other forms of retirement income such as Social Security, 401 (k) plans and IRAs.

Drawing on the cash value of a permanent life insurance policy allows people to use other resources to guarantee an income for life.

There also comes a time when people are becoming concerned about outliving their retirement savings. Drawing on the cash value of a permanent life insurance policy allows people to use other resources to guarantee an income for life, as a longevity annuity or a guaranteed benefit of life

. 2. wealth transfer. Life insurance can be an effective way to transfer wealth to your heirs while avoiding inheritance tax. Although the federal exemption for estate taxes were raised to $ 5,430,000 for 2015, there is still the inheritance of the state to consider. There are several states where you would not be caught dead in a perspective of estate planning.

Of course, these policies need to be implemented properly. life insurance payments are generally tax-free income, but they are still subject to inheritance tax if the property of the insured. In other words, if you have a policy on yourself, then it is considered part of your estate

Three examples of permanent life insurance can be used to transfer wealth :.

• Set up an irrevocable life insurance trust. you would then gift premiums confidence as donations are tax exemption on annual giving, you would not have to worry about paying the gift tax. The beneficiary of the policy would trust rather than your estate, so that the policy would not be included in your estate for purposes of estate tax. The proceeds of the trust would then be distributed to your children or grandchildren, but you configure it. The disadvantage of this approach is that, because the owner of the policy is an irrevocable trust, you have access to this policy. You give all access in exchange for tax benefits.
• Use a survival policy. If you might need to access the policy cash value, you can use a survival strategy, which covers more people and does not pay until the last person dies. Initially, the policy would be owned by one of the insured, but when the first passes insured, the policy then goes into a trust. Trust becomes the recipient, avoiding the estate tax because the survival of policy pays a death benefit on the death last, not the first death.
• Ensuring children the benefit of grandchildren. This can be a cost-effective even for people in their 60s or 70s to use life insurance to transfer wealth in a strategy of "skip generation". Generation 1 is the owner of the policy, so they can have access to money if they want, but when they die, the policy goes into a trust for the generation 3.

these are complex questions, so you'll want to discuss these with your financial and legal advisors to determine the life insurance post-retirement strategies are meaningful to you.

(This information should not be construed as legal advice or tax applicable to each individual. Please consult a qualified advisor regarding your personal situation. All guarantees are based on the ability the issuer application fee. Access to cash values ​​can result in costs and expenses redemption, may require the payment of additional premiums to maintain coverage, and will reduce the death benefit and policy values.)