Some people think talking about life insurance is taboo. They may be right that it is a morbid subject, but I believe it necessary when speaking on retirement planning. Regardless, they almost always have the same question in the end: “Is life insurance worth it?”
There are a few key reasons why life insurance is important for retirement. It ensures that that your loved ones are taken care of financially in the event of your death. This can be especially important if you are the primary earner in your family. It can also be used to help you plan past retirement, with effective use as a tool for leaving a greater financial legacy.
Perhaps the greatest benefit of life insurance is the fact that it carries no tax consequences, so you can rest easy knowing that your loved ones will receive the full income tax free. However, there are many different types of life insurance. We’ll touch up on those and further along in my series on retirement planning.
You can start by watching the video below, part 5, and I’m sure by the end you’ll agree: Life insurance is worth it.
Oftentimes, we start thinking about life insurance when we have a life event, when we get married, when we have kids. Those are situations where we know I now have people that are relying on my income. And if I don’t make it home tonight, what are they going to do?
That’s where life insurance fits in.
The huge advantages of life insurance are number one, when it pays a death benefit, your beneficiary receives that death benefit income tax free, literally no tax consequence whatsoever. So if I had a million dollar policy on myself and God forbid, I didn’t make it home tonight, my wife, who is my beneficiary, would receive a million dollars income tax free. Huge advantage.
But remember, it’s not money that buys life insurance. It’s your health. You can be the richest person in the world and be unhealthy and not get life insurance. So, the younger and healthier you are, the better. But generally speaking, someone should rely on your income.
For more answers to common retirement planning questions, check out the rest of the Question Mark: Retirement Planning series.