By combining life insurance and social security benefits in retirement and estate planning, some risks of a social security only retirement plan can be solved. If a couple is planning retirement income on social security only, they run the risk of the surviving spouse’s monthly income being drastically cut in retirement when one spouse dies. This can cause serious financial problems for the surviving spouse since some large expenses are fixed and will not reduce when one spouse dies. However, by having a life insurance policy for both spouses the surviving spouse can still receive additional income from the policy to supplement their own income and can pass the value of their own life insurance policy to the couple’s children, which will have favorable tax results.
See William Rainaldi & Frank Rainaldi, Social Security and Life Insurance, Wealth Management, Nov. 19, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
