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Wednesday, October 20, 2010

Assessing Insurance Needs for Seniors

blog posting by Michael Snowdon, CFP

Consider these "truths" from years past. The earth is flat. The sun orbits the earth. Humans will never fly. To these conventional wisdoms, lets add one more: Seniors don't need life insurance. Just as we now know those other "truisms" are not really true, I would suggest that most seniors need at least some life insurance. Even if you're beyond child-rearing and income-earning days, you may need coverage for one or more of the following reasons:

Estate settlement costs. If nothing else, people need funds to pay for the funeral and other costs associated with death. Dying may be inevitable, but it is not free.

Adjustment costs. When someone dies, the survivor goes through an adjustment period. Typically, adjustment costs aren't huge, but not everyone has the extra thousands of dollars sitting around. Life insurance proceeds can provide that money when it is most needed.

Retirement income. One of the advantages of permanent (whole life, universal life, etc.) life insurance is that it grows tax deferred. It's possible to build a fairly significant cash value by the time you reach retirement, which can be turned into an annuity or drawn on when you need it.

Part of a conservative financial planning approach includes maintaining a foundation of adequate savings and insurance before taking more speculative investment risks. Life insurance can provide some of that foundation. Before making a decision on this, why not get in touch with your financial advisor to talk it over?

Michael Snowdon, CFP

Michael is president of WealthRidge, a wealth mangement and financial planning firm, and is a professor emeritus of the College for Financial Planning. His focus in financial planning is to coach people in the process of meeting their goals and achieving their dreams.