Life Insurance Quotes

Evaluating life insurance needs as net worth increases

09/23/11

According to the San Francisco Gate, a person who purchases life insurance when he or she starts a family may reach retirement age and reevaluate the life insurance policy. In some cases, needs have changed. Life insurance purchased to cover significant debt may no longer be necessary because the debt has been reduced or eliminated, for instance.

However, considering a number of factors is key to ultimately deciding whether or not a life insurance policy is necessary. Retirees should evaluate their net worth against their debts and the needs of their beneficiaries. In some cases, children have reached adulthood and no longer need the financial support that life insurance would have provided in the event of premature death. It's also somewhat common for retirees' net worth to increase when they pay off their mortgage or debts.

If a retiree secured a good insurance rate at a young age, however, it may be a good idea to keep the policy. If investments are in index annuities or stocks, for instance, the availability of a guaranteed cushion is reassuring. The source notes that retirees may also want to consider donating life insurance payouts to charity if they pass away and don't need the entire payout.

According to the Insurance Information Institute, the average American with an individual life insurance policy owned $154,000 in coverage in 2010, about $12,000 less than the previous year.  

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