Why Older Adults Still Need Life Insurance
Older adults may wonder if they still need to be paying for life insurance since they no longer have children or others who are fully dependent on them. But even if no one is dependent on them, life insurance can help the people they leave behind get on with their lives.
Here's how life insurance can help your loved ones, even if you're older when you die.
Faster Access to Cash
People often leave their loved ones plenty of financial assets in their will or trust. But immediately following death, this money is likely to be tied up in legal knots. Survivors are likely to be temporarily denied access to some—or maybe even all—credit, investment, and banking accounts. This is still a problem, even if a survivor had access to their loved one's bank accounts through power of attorney. That's because you lose power of attorney immediately after the person dies.
Time will generally resolve these challenges. But in the short run, there will be lots of expenses, including funeral costs, plane tickets, and hotel costs for out-of-town family and loved ones. There will be a need for money to pay routine bills. This can leave a surviving spouse or adult children in a terrible cash crunch.
While the legal system surrounding death moves slowly, life insurance pays quickly. In addition, the beneficiary can deposit the insurance money in their own bank account, allowing them unfettered access to the cash. This will allow them to stop worrying about paying the bills.
Pay Estate Taxes
If your estate is greater than $12.06 million in 2022, your estate will owe federal estate taxes.1 Life insurance will help your heirs pay this tax, which in the case of federal taxes averages 40%. Life insurance isn't subject to income or estate taxes.
Life insurance is tax-free and payouts are quick, so loved ones can pay expenses without delay. This can be a blessing for those you leave behind.
If you have personal or business debt, your heirs may be forced to sell some of your investments to pay it off, even if they'd rather hold on to those investments. A life insurance policy will help your heir pay off those debts or at least buy them time so they don't have to sell in a hurry.
Allow Your Loved Ones to Live Comfortably When You're Gone
Life insurance guarantees that your loved ones will continue to live the way they do now. If you are still working, your income will disappear after you die. Even if you're retired, basic income sources like pensions and Social Security are likely to drop. If you want your spouse or partner to continue to live the way they did when you were alive, talk to your financial adviser about buying life insurance. There are many options even if you are past 60 years old. A life insurance expert can help you decide which is best for you and those you will leave behind.
Continue Your Legacy
Life insurance allows you to leave a legacy for the people you want to help. The beneficiaries can be your favorite charity or a nephew who needs help paying for college. You set the amount and they get your gift without delay. In many ways, because it is available quickly, life insurance is the ultimate legacy.
Cash for Unexpected Expenses While You're Still Alive
Some types of life insurance, including whole life, have a cash value component that you can borrow against while you're still alive. This will help you and your family weather all kinds of unexpected expenses, including healthcare costs at the end of life.
Life insurance gives your loves one the cash they need to settle your affairs and get on with living after you're gone. Talk with your Synovus financial advisor if you have questions; we're here to help.
Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
- Rocky Mengle, "Estate Tax Exemption Goes Up for 2022 ," Kiplinger, published Nov. 10, 2021, accessed Dec. 14, 2021. Back
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