Life Insurance
In short
The reason most people bought life insurance in their thirties is gone by their sixties. A few jobs remain for it, and it is worth knowing which, if any, apply to you.
Near retirement, life insurance is rarely about replacing a paycheck. It protects the survivor’s income when one of two people dies, because one Social Security benefit stops while most costs stay the same. It can also settle an estate, even out an inheritance or fund a planned gift. For many households the right answer now is less coverage, not more.
What coverage is for at sixty
At thirty-five, a death meant a lost paycheck and twenty years of mortgage ahead. By sixty the paycheck is about to stop on purpose, the mortgage may be gone and the children are adults. Four jobs survive, and each can be tested against your own numbers.
Replacing income the survivor loses, including a Social Security benefit and any pension that stops
Providing cash to settle an estate without a forced sale
Evening out an inheritance when the main asset is a house, land or a business
Funding a planned gift to a person or a cause
The income that stops at a death
When both spouses draw Social Security and one dies, the household does not keep both benefits. Social Security’s policy manual states that a person’s benefit can never exceed the highest single benefit to which they are entitled, so the survivor keeps about the larger of the two.
Write down what the survivor’s monthly income would be, and set it against the costs that do not halve: the house, the taxes, the insurance. If there is a gap, a policy is one way to fill it. If there is none, you have saved a premium.
Term, permanent, and the policy you already own
Florida’s insurance regulator draws the line: term insurance pays a level death benefit for a set number of years and has no cash value, while permanent insurance is designed to last a lifetime and builds cash value. Most term policies carry a conversion provision, and its deadline is easy to miss.
If you own permanent coverage, ask the insurer for a current in-force illustration showing how long the policy lasts at what you pay. On universal life the regulator warns that an underfunded policy will need more premium to stay in force.
What we are paid, and when we tell you no
Insurance pays commissions. If you buy a policy through us, the insurance company pays us for placing it, as it pays everyone who sells insurance. Investment advisory services are a separate arrangement, offered through MariPau Wealth Management, LLC, with its own disclosures. Weigh any recommendation, ours included, with that incentive in view.
The more useful thing we can offer is the word no. Where both benefits are close in size, the estate has cash and nothing needs to split unevenly, keeping the premium is the better plan, and we will say so.
Who this is for
You own a policy you bought decades ago and nobody has read it back to you.
Your term policy is near the end of its level period and a notice has arrived.
One of you would lose a meaningful share of the household income if the other died first.
Most of what you will leave is a house, land or a business, and you have more than one child.
Worth thinking about
If one of you died tomorrow, what would the survivor’s monthly income be?
Who is named as beneficiary on each policy, and when did you last look?
If your term policy is ending, what would the coverage still be for?
Would your estate have the cash to settle, or would something have to be sold?
If more than one child inherits and the largest asset cannot be split, how would that work?
Common questions
The mortgage is paid and the children are grown. Do we still need life insurance?
Often not. The test is whether the survivor’s income still works once one benefit stops, and whether the estate has enough cash to settle without a forced sale. If both hold up, more coverage is an expense with no job to do.
What happens when my term policy reaches the end of its level period?
Florida’s insurance regulator notes that a policy may allow renewal at a higher premium, and that most term policies can be converted to permanent coverage without evidence of insurability. The options and deadlines are in your contract, so read that section before the renewal notice arrives.
Will my spouse keep both of our Social Security benefits?
No. Social Security’s policy manual states that a person’s benefit can never exceed the highest single benefit to which they are entitled. The survivor keeps about the larger of your two benefits, and the smaller one stops.
Is life insurance tax-free?
Not quite. The IRS says proceeds paid because of the insured’s death are generally not taxable income, but interest on them is, and a policy transferred for value is treated differently. Insurance also counts toward the gross estate. We do not give tax advice, so ask your CPA or tax attorney before you act.
How are you paid if we buy a policy through you?
The insurance company pays a commission when a policy is placed, as it does everyone who sells insurance. Ask us what we would be paid. If you do buy, Florida gives you a review period after delivery, during which you can return the policy for a full refund of premium.
Sources
- Life insurance overview, Florida Department of Financial Services
- Life insurance and annuities, frequently asked questions, Florida Department of Financial Services
- POMS RS 00615.020, dual entitlement overview, U.S. Social Security Administration
- Life insurance and disability insurance proceeds, Internal Revenue Service
- Estate tax, Internal Revenue Service
These public resources support the general educational context on this page. They are not endorsements of Oliver Wealth Management, and none of the material here is personalized investment, tax, or legal advice.
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