What is Longevity Insurance?

Posted in Life Insurance

July 15th, 2009

One fear that is common to practically all Americans is the fear of dying poor. We have 401(k)s, pensions, Social Security, IRAs, and any other financial strategy we can think of to help support us in old age, but for many people that might not be enough. So, just to be on the absolutely safe side, many people are taking notice of something called Longevity Insurance.

Longevity insurance is money set aside just around the time you retire, to kick in 20-25 years later. Let’s say you’re 65 years old and you’ve decided to retire. You have various income sources, such as Social Security and your 401k plan, but still, you’re worried about money, so you decide to get longevity insurance. When you buy longevity insurance, you’re giving your insurance carrier a lump sum that you can’t touch until you turn 85. The idea here is that it’s possible your revenue after you retire won’t be enough for your needs, or could run out – after all, there are hundreds of thousands of Americans who are right now near or at their retirement age, and just about all of them have seen their 401ks cut in half by the economic crisis. With longevity insurance, they can look forward to getting their money back with interest when they turn 85. If it’s timed right it can really be a life-saver.

To learn more about longevity insurance, life insurance policies, and other insurance options, be sure to consult with a financial advisor. He or she can discuss the advantages and disadvantages of longevity insurance with you, and help you make a more informed decision.