Avoid Mistakes When Buying or Maintaining a Life Insurance Policy - By: Shane Flait

When approaching or entering retirement, you may put your estate and savings in order, but watch out you don't foolishly allocate your money. If you're considering life insurance to achieve some ends, avoid misjudging its benefit to you.

Life insurance has its uses for retirees. A few examples would be providing:

* for a surviving spouse,

* for covering final expenses and taxes,

* as a legacy for your children.

In any case, you should consider carefully what you intend to solve by using life insurance and how you'll go about achieving those intentions.

Remember, the reason for buying life insurance is to pay a benefit to a beneficiary when you die. The precise purpose of that payout varies with your situation. And life insurance is priced by the insurance companies based on your health and remaining life expectancy. The older you are when you buy it, the more it costs for the same payout.

Some types of insurance may offer living benefits such as a savings vehicle. Nevertheless, be sure to choose the policy type that best addresses your needs.

-Obvious mistakes for using life insurance:

One mistake is buying - or perhaps maintaining - a life insurance policy when no one depends on you as a source of income. Perhaps your spouse has died, or your children have grown up and become independent. After supporting or assisting them all those years you may want to reappraise your need for life insurance.

Closely linked to this is the concern to buy mortgage insurance to pay off your mortgage if you die. If you have no dependents, this may create an unnecessary expense. As you live and pay the remaining mortgage, its balance is always decreasing - and decreasing faster the more years you've paid it. Other options for handling the house mortgage may be less costly such as paying it off with other assets, or purchasing a life policy whose death benefit includes solving other intentions as well.

If you're still packing money away for later use in retirement, don't use life insurance as a savings tool when you have qualified plans like IRAs - traditional or Roth - or 401(k)s, you haven't topped out for the year. Life insurance offers no deduction for contributing to it nor does its savings component generally have the potential to increase as fast as investments you may use in qualified plans.

With a variety of ways to solve problems, getting clear answers is essential. Buying mail-order life insurance often can't address all your concerns and alternative solutions. Using it can leave you empty-handed. Never buy such insurance without checking out the company and getting answers to all your questions.

About the Author

Shane Flait helps you with your financial legal, tax, and retirement goals. Get his FREE report on Managing Your Retirement => http://www.easyretirementknowhow.com/FreeReportandSignUp.htm Read his ebook: 'Wise Way to Financial Independence' => http://www.easyretirementknowhow.com/WiseWayGate.htm

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