Many Americans are now working to create a savings plan that will allow them to provide for their families when they are gone. The baby boomer generation has watched the recession cripple their retirement savings and financial assets, forcing many of them out of retirement and into low-paying jobs.
According to a MetLife survey, baby boomers have increased their retirement age with an average age of 71 in 2012. And long-term health costs is a top concern for most baby boomers; many who believe it should be covered under Medicare.
Life insurance is one investment that will provide loved ones with the financial stability they may otherwise lack in the event of a spouse or parent’s death. Even a small investment may leave survivors with more income to support themselves than savings or Social Security alone.
“This is the simplest way to make something out of next to nothing,” AARP Financial president, Mac Hisey, told Money Magazine.
Those with limited income may consider purchasing a second-to-die life insurance policy, which is typically less expensive than an individual policy. This joint policy covers both husband and wife and pays the beneficiary, usually children, when the second spouse dies, reports Money Magazine.
Second-to-die life insurance is also called survivor-ship life and is used to pay taxes but second-to-die insurance can be used in other ways such as a spendthrift clause that requires the death benefit to be paid out over a period of time rather than in a lump sum payment. The beneficiary cannot change the settlement option and creditors of the beneficiary cannot take the money to pay debts. A life insurance expert can help you determine what type of policy will best fit your needs.
If you have a child with special needs, you can set up a trust that is paid to the trustee but is funded by the second-to-die life insurance policy. An administrator is assigned to manage the trust and pay for the child’s care. Again, speaking to a lawyer or expert in the field is your first step in identifying any issues with this possible option.
The recession has proven that anyone can fall under difficult financial times, severely jeopardizing their assets. Life insurance provides a sense of relief to policyholders that they will be able to leave something behind to their survivors.