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Retirees, It's Not Too Late to Buy Life Insurance

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Think you won't qualify for life insurance in retirement? Guess again.

"It's easier to qualify than in the past as underwriting has gotten better," says Rafael Rubio, president of Stable Retirement Planners in Huntingdon Woods, Mich. "There are options available in your later years," says Paul LaPiana, a financial planner and head of MassMutual's U.S. products.

You may wonder why you should care. After all, hasn't life insurance outlived its usefulness once the kids are grown, the mortgage is paid off and the policyholder is retired? Not necessarilly. These days, life expectancies are longer, the cost of long-term care is higher, and that mortgage isn't always retired when you are. A life insurance policy can ease the burden of an outstanding mortgage for your survivors and provide other estate-planning benefits.

The policies don't come cheap, and just because you qualify for life insurance doesn't mean you should get it. Life insurance only makes sense for retirees who use it in estate planning and can afford to keep paying the premiums, which can be thousands of dollars per year. Otherwise, the policy will lapse, coverage will end, and you will have wasted your money.

Your health risks and the type of life insurance, whether term or permanent, affects your premium as well as your chances of qualifying. Because medical underwriting differs by insurer, you should have some idea of what companies look for in applicants before shopping around for a policy.

When the Setting Up Every Community for Retirement Enhancement Act passed in 2019, life insurance took on greater significance by becoming the new stretch IRA. The legislation eliminated the option for most heirs to "stretch" distributions over their lifetime. Now, most heirs other than a spouse must empty the IRA within a decade of the original owner's death, forcing them to take larger distributions than they would for a stretch IRA and potentially pay more in taxes if the money pushes them into a higher bracket. Those distributions are generally taxed as income for........

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