Why is life insurance recommended for my spouse late in life?
This seems to be a theme that has come up a lot in the forums, but I confess I don't unerstand the answers. My report recommends life insurance on my wife until she reaches age 78, then there is increasing life insurance for about 10 years, then it decreases until she is 98. The premiums for this insurance add up to about $150K and she has no income to protect (except Social Security and some annuity income, both of which start long before she turns 78). This seems like a wasteful recommendation to me! In addition, no life insurance is recommended for me in these later years, perhaps because my wife would receive survivor benefits if I die, but I also have annuity payments like hers. I just wonder if I am doing something wrong?
RSS
There could be a number of different things going on. If she has a pension that does not have a survivor benefit as per your inputs, this could put your living standard in jeopardy should she die. Or perhaps you have asked for your living standard to go up in the estate planning folder?
She doesn't have a pension, just an annuity. When I take out the annuity, the life insurance goes away. But I'm not sure why I need the life insurance then because I set up the annuity so I would get 50% of the payout after her death and my cost of living should go down then as well.
Well, one good thing is that you can use the contingency planning feature to show exactly what happens each year and why the insurance is needed. You can see if you examine the reports where the insurance benefit kicks in should she die in some year you specify. This will allow you to see why the insurance is needed to keep the living standard at the same rate or whatever percentage of that you specify. It's hard to guess without seeing the reports.