While you may know that term life insurance provides a fixed benefit in the event you pass away, it may not seem like a great tool for your retirement planning. After all, term life policies don’t accrue cash value and they can’t be used as security for a loan. Even so, there are a couple of ways that the right term life insurance plan will support your investing efforts and make it easier to build wealth that makes your retirement years more comfortable.
Your Options with Term Life Coverage
USAA term life insurance is easily the most simplistic of all life insurance plans. For a specified premium, it is possible to obtain a guaranteed number of benefits that will go to the beneficiary of your choice, in the event you pass away while the policy is in effect. The term aspect means that you can secure the plan and have it remain in effect for whatever time frame you desire. It is possible to buy a term life policy with a term of as little as one year, and as much as thirty years.
It is possible to structure a term life plan in one of two ways. The more common approach is to lock in a fixed premium that will apply for the duration of the policy term.
This means that no matter what happens your rate will never change. Another approach is to go with an annual renewable plan that includes a premium that will increase as you age. The latter option sometimes allows you to increase the amount of coverage at each of those review points.
How Does This Relate to Investing?
While term life insurance is not an investment that yields returns while you are alive, it does provide protection while you accumulate investments like stocks, real estate, and bond issues. While those investments are busy generating returns that increase your wealth, that term life insurance policy is quietly providing security for you and your family.
With this kind of plan in place, you don’t have to be concerned about whether there will be money to take care of your family if you pass away suddenly. There are no worries about how they will manage to keep the family home or pay off your final expenses.
That type of security makes it much easier to step out and go after profitable investments that allow you to build your wealth incrementally. In other words, that term life policy provides a foundation that you can use to build a strong portfolio of financial assets.
Affordable Life Insurance After You Retire
One school of thought holds that people don’t really need life insurance after they retire. The idea is that, by the time they reach retirement age, most people have assets that will easily take care of them and their families for the rest of their lives. While that is true in some cases, it is definitely not the case in others.
Dropping insurance coverage after retirement is a risky venture. As many people found out during the recent recession, investments have a way of losing value when the economy tanks. While you may have thought you were set for the rest of your life, changes in the marketplace can lead to even stable investments like real estate decreasing in value. Where would that leave you and your loved ones if you were to become seriously ill and pass away after an extended illness?
Since retirees often live on fixed incomes, USAA term life insurance is a viable option up to the age of 80. Maintaining a term that covers you at least to that point will mean if you do leave behind a large number of medical bills, your loved ones will have the resources to settle those debts. That will mean whatever is left of your pension plan, and other retirement income sources can still go toward their upkeep.
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