Every stage of life has its own unique financial planning and insurance needs and retirement is no different. If your life insurance policy hasn’t changed in twenty years, the coverage it provides may no longer be well suited to your stage in life. That doesn’t mean you should drop all life insurance but you may want to revise it.
Keep in mind that even in retirement life insurance can be an important component of a sound financial plan.
Here are five reasons why you might still need life insurance:
If you are interested in this type of gift, however, make sure the charity is a qualified organization that will accept a policy. Some organizations are not equipped to go through the necessary processing to handle these types of donations and others can do so only if an insurance policy is structured in a specific way. You can deduct claim deductions if you name the charity as the irrevocable beneficiary. Charitable gifts of life insurance can pose problems if they aren’t structured properly so seek advice.
Transferring a Policy? Don’t Wait Too Long
If you intend to transfer your life insurance policy for the purpose of reducing your estate tax, you might not want to wait too long.
Here’s why: Life insurance transfers made within three years of your death are disallowed for federal estate tax purposes. In other words, the proceeds of the policy will still be included in your estate.
To effectively eliminate the proceeds from your estate, you must give up all rights of ownership. So give the decision careful thought. Suppose you transfer the policy to your spouse and later get divorced. You won’t be able to take back ownership. Transferring a policy means you no longer have the right to: