Life Insurance Cash-Out Options: A Retirement Quiz

Life Insurance Cash-Out Options: A Retirement Planning Quiz

Getty Images

If you’re like a lot of people, you probably have an old life insurance policy stuffed in the back of a desk drawer somewhere gathering dust. Did you know you could tap into that old policy in retirement or even possibly sell it for some much-needed cash?

Life insurance is an important risk-management and savings tool that can be used as part of the financial planning process. Generally, it is purchased for three reasons: First, as an estate planning tool to help with burial and funeral costs. Next, to protect the income of a spouse in the event that the policyholder dies prematurely. And finally, to set aside money for retirement.

As a result, life insurance is now owned by over 87 million U.S. households, to the tune of nearly $600 billion in premiums a year. However, how well do policyowners really understand what they’ve got and how to best use life insurance for their retirement needs?

A recent study in the Journal of Financial Planning shows that Americans scored less than 50% on questions about life insurance. One such area that Americans don’t seem to “get” is what to do with a policy in retirement. However, life insurance can be tapped into during retirement or even sold on the secondary market to provide cash flow to help meet expenses and spending goals in retirement.

See how you do on this true/false quiz on life insurance strategies in retirement planning, written with guidance from Anne Long, Senior VP at Lighthouse Life and Jamie Mendelsohn, Executive Vice president at Ashar Group.

Written by Jamie Hopkins, Esq., LLM, MBA, CFP®, RICP®. He serves as Director of Retirement Research at Carson Wealth and is a finance professor of practice at Creighton University's Heider College of Business. His most recent book, "Rewirement: Rewiring The Way You Think About Retirement," details the behavioral finance issues that hold people back from a more financially secure retirement.

Sponsored Financial Content