Do I need whole life insurance?
All children are grown, no mortgage, no loans, enough money put away for retirement.
Great question Scott. As with all things related to your financial life, "it depends". At first blush, the answer could be no, you don't need permanent life insurance. There's no need to cover the mortgage or other debt, children's education, or your retirement. If you're already in retirement or financially independent, there's likely no need to cover current lifestyle, and it sounds like final expenses wouldn't make a significant dent in your retirement nest egg.
Where permanent life insurance could play a role in your financial planning is if you have a desire to pass on money to heirs or causes beyond remaining assets, or have a concern about the impact of estate & inheritance taxes on reducing what you leave to those people & causes important to you. Keep in mind that while the federal estate tax exemption has risen substantially over the years, the states have not followed suit & can still extract a significant haircut.
Another consideration could come into play if you have a pension coming. In some cases taking the pension on just your life and then providing a life insurance payout to the surviving spouse or partner could increase your retirement income at essentially no net cost. Of course this is highly dependent on age & health so it's not for everyone.
Yet another consideration has to do with protecting your retirement nest egg. One of the biggest threats to our retirement savings is the need for custodial care, either in home, in an assisted living facility, or in a skilled nursing home. The cost for this can be significant and often puts a severe financial strain on the family having to deal this. Especially true if there's a healthy spouse or partner relying on that nest egg for retirement income.
There are new life insurance products on the market which can provide help to address this issue. They don't make sense for everyone, but certainly can provide critical protection in certain situations.
Hope this gives you a flavor for the considerations Scott. Congrats on putting yourself in such a strong financial position! | 06.12.15 @ 13:44
To answer to your question, ask another one: If one is to assume that other assets are sufficient to take care of all 'needs,' what besides a properly designed Whole Life policy could create the tax-favored result that such a policy could?
Such a policy can protect your estate from stock market losses, and at the same time provide a competitive yield on premiums paid without exposing the gains to income taxes. By squirreling away unneeded deposits in Whole Life insurance, thus reducing reportable earnings, one can also reduce the likelihood of income taxes on Social Security income.
| 07.07.15 @ 21:48
You asked about Whole Life insurance. This is insurance with a savings component as part of the policy and is very expensive compared to Term insurance. Get a quote for Whole Life and then get one for Term insurance. Whole Life keeps the savings portion (cash value) and only pays out the death benefit if something happens to you. To get the cash value, you must cancel the policy or if you borrow, you often pay it back with interest. Also, the cash value often earns 0% interest for the first few years as the agent selling it earns a high commission. Take the amount you would have spent for the Whole Life minus the amount for Term and invest that difference into an IRA. Your IRA (put into a mutual fund) will earn right away and you will have something to replace that Term insurance later in life. | 11.25.15 @ 13:55
Yes, No or Maybe. The choice is yours. You may feel you need no insurance at all and that's OK. You may actually have enough set aside for no worries. But, is what you set aside liquid? Does it have to be sold to get money out of? Is it required to go through probate before it can be touched? You may be absolutely correct "you" may not need life insurance. That said may I ask this question? "How hard do you want to make it for those you leave behind to handle your passing? That's what we're really dealing with in your question. You don't need life insurance, those you leave behind might benefit from your ownership of some. Maybe a son has to take a loan to pay to clean up your affairs, sure he can wait months to recover the costs, or maybe he has to sell your favorite stuff at garage sale prices... I'll stop now because you either get the point or you don't. I bought my first insurance policy at 18, because I didn't want my mom to suffer twice from my loss. It's hard enough to lose somebody, but then if you have to be their bank to settle things up ... | 03.05.16 @ 02:34
I think you're asking the wrong question.... It's not "do I NEED whole life?" It should be "will whole life benefit me?" The answer to that question is: Probably (especially if you're willing to consider Universal Life, Variable Universal Life, and/or Indexed Universal Life).
But it's impossible to know without a getting an idea of your current and future financial needs.
Good luck! | 04.14.16 @ 15:48