As the ‘month of love’ ushers in the rebirth of Spring, reflections on who really matters to us
by Kurt FasenMr. Fasen is Senior Vice President, Insurance Sales Marketing with Voya Financial. Visit voya.com
Valentine’s Day has a way of bringing out the hopeless romantic in even the most sensible among us. Expensive gifts are exchanged. Over-the-top gestures of love are commonplace.
Traditionally, we don’t approach the month of February with an eye towards practicality. But consider this food for thought. What better way to close out February – a month that is centered around love – than to take stock of who matters most in our lives and take steps to ensure those people are protected? And, from a financial standpoint, what better way to protect our loved ones than with life insurance?
For couples nearing or in retirement, the protection of life insurance (cash value life insurance specifically) allows them to expect the best, but prepare for the worst. The supplemental income in a cash value policy can be accessed for any reason in retirement, giving consumers peace of mind that they could handle an unforeseen financial event. Additionally, the policy’s death benefit allows both partners to sleep well at night, knowing their better half can live out their retirement years in comfort.
To help drive home this point with your clients, let’s take a look at a few common financial challenges, and how life insurance can help couples navigate these issues when they are nearing or in retirement.
A couple spends too money much during the early years of retirement
From a health standpoint, the early years of retirement are the best years. Couples may travel, dine out more frequently, or explore hobbies they seldom had time for when they were working. In an ideal scenario, they would have the chance to periodically assess their spending and recalibrate to ensure their savings lasts. However, if unexpected expenses arise, such as a prolonged illness or disability, a loan or withdrawal from a cash value life insurance policy could help them maintain their desired lifestyle.*
Their savings is impacted by a serious accident or illness
A Harvard University study published in the American Journal of Medicine reported that medical costs represent 62% of all personal bankruptcies. An interesting but alarming data point shows that 78% of filers had some form of health insurance, which bucks the myth that medical bills affect only the uninsured. There is arguably no better time to have access to a mature cash value policy than in retirement, when the risk of serious illness or injury skyrockets and retirees are unable to recoup losses without returning to work.
In addition, Chronic Illness or Accident riders can be added to many life insurance policies, which can offset medical costs and help consumers meet expenses. Some carriers offer the added benefit of restriction-free benefits, whereby consumers can use the funds for a wide range of expenses including mortgage payments, utility bills or even groceries.
A deceased spouse had outstanding debt
In a report last year, the Consumer Financial Protection Bureau’s Office of Older Americans issued a report stating that 30% of homeowners 65 and over had mortgage debt in 2011, compared to 22% in 2001. The organization also stated that “in general, older consumers are carrying more debt, including mortgage, credit card and even student loan debt, into their retirement years.” In the event of one spouse’s untimely passing, a life insurance policy can mean the difference between the surviving spouse paying off outstanding debts and living out their retirement securely, or struggling to make ends meet.
The surviving spouse is likely to outlive her husband by many years
While life expectancy is of particular concern for women, it’s an issue that affects all retirees. Many don’t recognize that life expectancy figures are an average. A longevity report from the Society of Actuaries (SOA) stated that more than half of retirees and pre-retirees underestimate the life expectancy for someone of their age and gender. According to SOA data, males have a 40 percent chance and females have more than a 50 percent chance of living to age 85. Dealing with the emotional toll of losing a loved one is difficult enough, but not having a life insurance policy in place can lead to years of undue financial hardship after the loss. Life insurance can allow the surviving spouse to maintain their current lifestyle for years to come – just one more reason for your clients to expect the best, prepare for the worst and insure their love with the protection, flexibility and financial safety net of life insurance.
* Policy loans and partial withdrawals may vary by state, generate an income tax liability, reduce available surrender value and death benefit or cause the policy to lapse.