“There are ways to increase a person’s take-home pension by using life insurance to provide income instead of relying on the spousal pension benefit,” Jackson says.
Adding a spouse to your pension is an irrevocable choice. You can decide to purchase a life insurance policy that accumulates some cash value and has flexible premiums, instead of adding a spouse to your pension, to help supplement your retirement income.
Many seniors set money aside in their retirement goals for their grandchildren through certificates of deposit (CDs), savings accounts or savings bonds. Funds from your CD can instead be used to purchase a valuable life insurance policy with yourself as the insured and your grandchild as the beneficiary. The benefits that can end up passing to your beneficiary are generally income-tax-free, bypassing probate.
Chronic and critical illness expenses
Some life insurance policies can also offer living benefits, covering expenses for long-term care or other costs that can accompany chronic, critical and terminal illnesses.
“You could set up a chronic illness rider on one of our universal life products and draw 2% of the death benefit a month as long as you’re in a long-term care facility or require home health care,” Jackson says.
Regardless of your financial situation, planning is critical to achieving your retirement goals. “If you haven’t created a plan before retirement, it’s not too late,” Jackson says. “But planning before you retire can save a lot of heartache down the road.”
And before dropping your life insurance, consider what it can do. “Life insurance is an important part of a retirement plan that a lot of people may not even look at,” Jackson says. “If you’re smart about it in your 50s, then when you retire, it doesn’t have to be an increased expense. It can be a decreased expense while still providing protection.”