Sunday, November 3, 2013
What should you do if you have clients who are empty nesters that have a cash-value life insurance policy purchased long ago? Here are some reasons to hold it instead of cashing out:
- Life insurance proceeds can help replenish savings exhausted by retirement spending.
- Descendants may like to inherit the tax-free proceeds.
- Name a charity as the beneficiary or donate the policy.
- Leaving the tax-free death benefit to the beneficiary may make better investment sense than taking out the accumulated cash value.
- It may make sense to keep the policy in force, but borrow against the accumulated cash value.
See Kevin McKinley, Five Reasons to Keep a Life Insurance Policy, Wealth Management, Oct. 23, 2013.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.