Is it wise to continue to have life insurance in retirement if you have enough assets to fund your retirement and in case one spouse dies. Should you continue life insurance you will never see for your kids inheritance?

ebaines

Of course life insurance can be helpful to the kids as an inheritance. Whether it makes economic sense is another story - you may be better off just gifting the equivalent of the life insurance premiums directly to your heirs. However, if you have a large enough estate so as to trigger estate taxes (total assets >2M), life insurance can be a very effective tool in estate planning. Normally life insurance proceeds are treated as part of your estate assets, and so can be subject to estate taxes. However, if you establish an irrevocable life insurance trust for your life insurance then your life insurance proceeds can pass directly to your heirs outside of your estate - tax free. This can help "make up" for the estate taxes that may be due on the rest of your estate, and can be especially useful if you have a large illiquid asset that would be difficult to sell a portion of for taxes (like a family homestead or business). If you fall into this category I strongly suggest you get some professional estate planning advice to figure out whether this makes sense for you.

kliem

I agree almost everything except the gifting. Life Insurance will provide liquidity (especially when set up in an ILIT - Irrevocable Life Insurance Trust) -- it is a vehicle to leverage your net premium outlay which is usually has higher death benefit. Lifetime gifting is limited to $1m. I guess it depends on how much of your net worth we are talking. The higher the net worth, the better use of life insurance as a leverage!

xphelper

You, and only you, can make that decision.

xphelper

Fr_Chuck

Normally there are in todays society levels of insurance,

As a younger person ( 20 to ?) one normally needs 100's of thousand in insurance to cover loans, for thier spouse to help with support, for kids if they die. As kids are grown and home is paid for, normally we need less.

So if I was doing a review of a senior, I would look at total debts, the difference in the retirement money if they did for thier spouse. cost of final expenses and to add in costs of final posible medical bills

Next we look at what type of insurnace you have, is it whole life, where you can have the policy chnged into a paid up policy,, you keep slightly less insurance but don't have to pay for it anymore.
If it is term, what level, when does the rates go back up.

Also insurnace can be used to help pay taxes on the other property that is left in an estate.

If I was sitting down with you, it would take me 30 min or so of just questions and going over your needs to even start to give an opinon.