When your clients reach their 60s, they almost certainly have two major goals: retirement and leaving a legacy. If they're under 65, they may still be planning for retirement. If they’re at or over 65, then they have either retired or they’re close to it. In either case, there is still planning to be done. Life insurance and annuities can help with both retirement and leaving behind a legacy. It has the potential to do more than that as well.

Adjusting for New Priorities

Let’s say your client purchased a $2 million dollar term policy 30 years ago for mortgage protection and income replacement.  Fast forward to present day, and your client is now 60 and has the house paid off.  They no longer need the full $2 million in coverage but still have a need, albeit reduced, for income replacement.  Additionally, the debts are reduced if not eliminated altogether and there are no longer children in college. A growing concern among this demographic is protection of their principal in their investment portfolio.  With their increased age, they have less time to be able to withstand large market swings.  At the same time, the client still wants to be able to leave a legacy to their heirs. These objectives can be accomplished in two ways:
  1. Converting/Reducing Current Policies The first thing a client should look at with a life policy is obtaining a long-term guarantee to protect against associated risks (market, inflation) in order to protect their current portfolios, either by reducing their current term policy or better yet, by converting it to a guaranteed permanent life insurance policy.The reduced life insurance policy is still as affordable as the prior term policy, while providing both a living benefit while alive and/or a tax-free benefit to their beneficiaries.For example, your client has $500,000 in a retirement portfolio and has now converted his life insurance policy to $500,000 to protect against both mortality and morbidity risk.Today’s policies offer additional features such as living benefit riders which allow consumers to access the death benefit early in case of terminal or chronic illness. This tax-free benefit allows you to hedge against the future costs of care while protecting your retirement portfolio.
  2. Using an Annuity for Guaranteed Income Your client is in their 60s and retired or near it. He or she owns an asset not needed as retirement income and is concerned about inflationary risk and market volatility. A good strategy is converting their retirement accounts or savings into an annuity that can provide income which keeps pace with inflation. For example, Bob is 60. He has $50,000 in a CD that he’s been planning to use for retirement. Bob has been lucky enough to gain a strong pension, benefits from Social Security, a 401k, and has had success in the stock market. The money from his CD isn’t needed. Besides, it has a low interest rate and it isn’t staying at pace with inflation.Bob can roll over the CD when it is time for renewal and purchase an income annuity with an inflation rider that can defer payments for the future when Bob retires.The other benefit is that Bob’s payment will increase by 3 percent each year to keep pace with inflation.  Regardless of the stock market performance or the general economy, he has guaranteed an increasing income stream that will last as long as he lives.  This is a great strategy for clients who are looking for guaranteed income and protection against inflation for their income stream.

Leaving a Legacy

Your client is in retirement or nearing it and realizes he or she has plenty to spare. They can’t take it with them and don’t want to selfishly spend it all while they can—so the focus turns to leaving it for the future generations. How do they accomplish this without heavy taxation? They also want to maintain control of their assets without giving up rights of ownership. Asset maximization is the best strategy. Let’s use our example, Bob. He cashes out his CD and purchases the single premium immediate annuity still. Then he uses the $3,800 a year from the annuity to purchase a life insurance policy with $150,000 coverage. When Bob passes, his beneficiaries receive the death benefit and the remaining value of the annuity. Thus, the legacy left from one asset increases the original $50,000 by a minimum of 300 percent.


With life insurance, your clients can protect their families from financial disaster, add another income stream and greatly increase the amount left behind while minimizing taxes. So whether their New Year’s resolution is to maximize assets, fund college for the grandkids, obtain life insurance over 60, protect the family, invest money safely, grow their legacy, firm up retirement, or be smarter with their money… …life insurance is the perfect tool. Need help with planning solutions? Call us at 1-800-823-4852 and ask to speak to a Brokerage Director, or click here to email our Brokerage Sales Support team. Life Insurance as an Asset Class: Download Your Free Toolkit