Life Insurance for Retirees in Nebraska

Most people don't call me about life insurance. They call because they're turning 65 or retiring early, and we sort out the health insurance first. Once that's settled, we look at the other pieces of the puzzle, and life insurance is usually one of them.

The question that matters isn't "how much coverage do you want?" It's this: what happens to the people you love, money-wise, the month after you're gone? If the honest answer is "they'd be fine," you may not need much. If the answer makes you wince, keep reading.

Do you still need life insurance after 60?

You need it if someone would lose money when you die, or if you want to leave money on purpose. If neither is true, you might not need any, and I'll tell you so. Retirement does change the reasons. Nobody is replacing a paycheck anymore. Here's what I usually see instead:

The income reason is the big one for married couples. When one spouse dies, the household usually goes from two Social Security checks to one. If a pension was set up without a survivor benefit, that check can stop too. The grocery bill and the property tax bill don't get cut in half.

What's the difference between term and permanent life insurance?

Term life covers you for a set period and pays your beneficiaries only if you die during that period. Permanent life, which includes whole life and universal life, is built to last your whole life and can build cash value. Term costs less up front. Permanent costs more because the company expects to pay a claim someday.

Here's the catch with term at our age. A 10-year term bought at 70 ends at 80. If you still need coverage then, renewing or buying a new policy at 80 will cost a lot more, if you can qualify at all. So I ask people a simple question: will this need still be here in 10 years? If yes, we look hard at permanent coverage.

There's also variable universal life, where the cash value rides on investment accounts. That's investment territory. I don't give investment advice, so that's one I'll point you elsewhere for.

For a deeper side-by-side, see term vs whole life insurance for retirees.

How much life insurance do you need in retirement?

Start with the bills your death would leave behind, then subtract what's already set aside to pay them. Forget the "10 times your income" rule. That was built for families with a working paycheck. Here's the math I do at the table:

1. Final expenses. Ask a funeral home for its written price list. Federal law requires them to give you one. Add a cushion for last medical bills. My final expense insurance page walks through this part.
2. Debts. Mortgage balance, car loans, anything you co-signed.
3. The income gap. What would your spouse lose each month, times the number of years you want to cover?
4. Legacy. Any amount you want to leave on purpose.
5. What's already there. Subtract savings set aside for this, existing policies, and survivor benefits your spouse would get.

Here's a made-up example so you can see the shape of it. Bob's pension pays $1,200 a month and has no survivor benefit. If Bob dies, Betty loses $14,400 a year. Covering that for 10 years is $144,000. Add $10,000 from their funeral home's price list and a $20,000 mortgage balance. Subtract $40,000 in savings Betty could use. The target lands around $134,000.

Your numbers will be different. The point is we build it from real bills, not a rule of thumb. Let's do the math. I'm a math guy.

What does life insurance cost at 65, 70 or 75?

It depends on your age, health, tobacco use, the amount and the type of policy. I don't post prices on this site, because a number on a web page is a guess. The only price that matters is the one a company offers you after it looks at your application. What I can tell you is how the pricing works.

How companies decide what to charge

• Fully underwritten. You answer health questions, and the company may check your prescription history or ask for a short exam or lab work. If you're in decent health, this is usually where the best prices are.
• Simplified issue. A shorter health questionnaire and no exam. Faster, but you'll typically pay more for the same amount of coverage.
• Guaranteed issue. No health questions. Coverage amounts are small, and the full benefit often doesn't kick in for the first two years. I cover this on the final expense page.

Every birthday you wait, the price goes up, and a new diagnosis can close one of those doors. That's not a sales line. It's just how age-based pricing works.

How do taxes and Nebraska's inheritance tax affect a payout?

For federal income tax, the IRS says life insurance proceeds a beneficiary receives because the insured person died generally aren't included in gross income. Interest paid on those proceeds is taxable. Nebraska adds one wrinkle most states don't have: an inheritance tax on what heirs receive.

Here are the Nebraska rates for deaths on or after January 1, 2023:

Relatives in the first two groups who are under 22 are also exempt. Which assets count, and how a life insurance payout is treated, depends on how everything is set up. That's a question for your estate attorney or tax preparer, not me.

How do you pick a life insurance company?

Look at financial strength first, then price and policy features. A life policy may not pay out for 25 years, so the company needs to still be standing. AM Best is one of the companies that rate insurers' financial strength. Nebraska happens to be home to several large life insurers:

This isn't a ranking, and it isn't a list of companies I represent. It's a starting point. For more, see the best life insurance companies for seniors in Nebraska and Nebraska-based insurance companies retirees should know.

After the rating, compare what's inside the policy. Ask whether the premium is guaranteed or can change. Ask whether the policy lets you use part of the death benefit early if you become terminally or chronically ill. Some life policies carry long-term care or chronic illness riders, which I explain on the traditional vs hybrid long-term care page.

How does working with me on life insurance work?

I've been licensed in life and health insurance since 2017, and retirement is where I spend my time. We sit down, talk through what the money would need to do, and run the numbers. Then I show you options from more than one company, and you decide. It's not my decision, and I won't pretend it is.

My help costs you nothing. The insurance company pays me when a policy is placed, the same way it works with Medicare plans. I explain that in how Medicare agents get paid. We can meet at my office in Lincoln or by phone or video, and I still do some home visits.

Nobody knows how long they've got, me included. What I can do is help you plan for it so the people you leave aren't scrambling. If you've been putting this off, read the wrong retirement question, then talk to me.