Longevity Insurance Can Help Those Worried About Outliving Their Money
Updated: Mar 25
With longer life spans comes the necessity to be sure your money is around at least as long as you are. Longevity insurance – where you pay a certain sum to an insurer when you’re in your 60s in exchange for monthly payments 20 or more years down the road – is a lesser known insurance product that is growing in popularity, especially considering potential cuts to Social Security benefits and the absence of pension plans in corporate America these days.
According to the Society of Actuaries, for a relatively healthy 65-year-old couple, chances are 63 percent that one of them will live until the age of 90 and 36 percent that one will make it to 95. Some financial advisors consider longevity insurance to be a good way to manage the risk of living to a ripe old age.
Longevity insurance is an annuity with a fixed income that kicks in at a specified future age, usually 85. For example, a “maximum income” version of MetLife’s longevity insurance with a lump sum investment of $100,000 at age 65 would pay a woman a little over $59,000 annually once she reached the age of 85. A man would receive more – just under $74,000 a year – because men have shorter life spans than women.
Under many longevity insurance policies, if you die before payments begin, your heirs are out of luck. However, there are alternate versions that guarantee some death benefits to heirs, but they are usually more expensive at the outset.
If you’d like to learn more about long-term care and other estate planning strategies, call our office today to schedule a time for us to sit down and talk with a Personal Family Lawyer®. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.