By: Mark Milbrod, CLU, CLTC
Vice President, ASG

We all deal with objections on a daily basis.  That just goes with the territory.  When dealing with advisors, one objection that comes up most often is hearing from clients that as they get older, the need for life insurance goes away.  That is the farthest thing from the truth.

In fact, in most cases, the need for life insurance is alive and well. The clients that we deal with just don’t understand why they need it.  This invokes the old expression that “you don’t know what you don’t know.”

It’s up to us to educate our clients as to why they still need it.  So let’s dive into some scenarios of why they need it and how life insurance can play a vital role for our clients that lead with that objection.

Legacy Planning

People in general want to leave a legacy to their families.  They also should be living their retirement to the fullest.  A lot of post retirees limit their spending so that there will be a “leftover” for their children/grandchildren.  The notion here is to not leave assets to heirs.  Instead, leave them life insurance.  This allows them to maximize their retirement years and the life insurance acts as a cost effective way to leave that legacy (and a tax-free one at that).

Remaining Debt Offset

Although people try to eliminate debt at retirement, the truth is that there can still be a fair amount of debt carried during the retirement phase.  This can have a serious financial effect on a surviving spouse.  Life Insurance can be used as a means to pay off that debt.


If clients have older insurance policies, conduct a policy audit.  Often times, the original need for those inforce policies might be diminished, but as they get older, their needs change.  If older policies have cash value that can be 1035 Exchanged, those funds can be repurposed into a new life policy or annuity contract that offers Long Term Care benefits. These benefits more adequately address the current needs, which may be an LTC focused policy.

Social Security/Income Protection

As couples retire, they can be receiving multiple sources of income, such as distributions from an IRA/401(k) retirement plan, pension and/or Social Security.  There may also be reduced survivor benefits, which can negatively impact a survivor’s continuing income. This is especially true with Social Security benefits.  For couples who are both receiving benefits, one of those benefits (the lower of the two), is lost at the death of one spouse.  Life Insurance can be used to replace that lost income as well as any other income that reduces upon a first spouse’s death.

Long Term Care Planning

In general, a Long Term Care event can be the single largest threat to retirement income.  I often say that no retirement plan is complete without some degree of LTC protection.  With all of the options available today in the hybrid life/ltc space, it is imperative to have a life insurance plan in place to protect retirement income.  According to recent statistics, 7 out of 10 people over the age of 65 will have long term care expenses of at least $250,000 during their lifetime, making this a more urgent matter to address.

Group Insurance Portability

As people exit the workplace upon retiring, they often lose any group life insurance benefits.  Unfortunately, group life insurance is the only form of protection that most people have. In addition, it is not generally portable.  An individually owned life insurance policy can negate the loss of that group coverage.

Tax Planning

Life insurance can also be utilized to offset income and possible estate taxes that can be levied against assets upon the death of those individuals. By having life insurance in place, the heirs can have adequate liquidity to cover the tax on those assets and increase the net amounts they receive.  This becomes even more valuable under The Secure Act when an individual has a non- spousal beneficiary for their qualified assets. 

Concentrated Asset Positions

Life insurance can be utilized as a tremendous leverage tool for concentrated asset holdings.  For example, if someone had a stock position that they are holding that will eventually be left to heirs, think about liquidating that position, paying the tax and with the net proceeds purchasing a guaranteed life insurance contract.  Those proceeds will be tax free and often a multiple of the original asset that will significantly increase the amount that is ultimately transferred to an heir.  And along the way, you are removing any market risk by providing a fully guaranteed tax-free death benefit.

As the summer winds down and we enter the fall selling season, think about possible prospects you have that may fit into any of these scenarios outlined above. 

The ideas above are just the tip of the iceberg.  There are other practical uses for life insurance for our older clients.  But, if nothing else, this is definitely food for thought the next time that some of your pre (or post) retiree clients tell you that they no longer have a need for life insurance.