Life expectancy isn't the most pleasant topics to ponder, but probably one of the most important when it comes to long-range financial planning. This is especially true for women. When is comes to their financial lives, most women today have fewer financial assets then their husbands. While our world is changing, women are still not generally the main income source for the family; they have experienced more breaks in their career paths (due to children, caring for aging parents, etc), have lower retirement plan balances in 401k plans or via a pension, and are often not the investment decision makers in the household. This current reality leaves women at significant risk upon the death of their spouse.
Ginger Takes the Cake
As it has often been said, Ginger Rogers did everything Fred Astaire did, but backwards and in high heels. The fact is, when it comes to financial planning women face many more significant challenges then men, including a longer life expectancy. According to the National Vital Statistics Report in December 2007, the average life expectancy overall in the United States is 77.8 years. Breaking that figure down by gender shows that life expectancy for men is 75 years and 80 years for women. So, for a same age couple, the wife can expect to live five years longer.
Figures such as this are based on life expectance from birth, but what really matters to you is life expectancy from right now. For a 65-year-old man's that number is 82 and for a 65-year-old woman it's 85. What this means is that a woman's income is going to have to stretch a little longer so her husband should consider that in determining the dollar amount of life insurance he needs on himself. To help you figure out where you stand visit our Life Insurance Needs Calculator and make sure that you plan enough for the lives you are protecting.
These life expectancy numbers are averages, so you may want to play it safe and plan a few extra years just in case. You will also want to adjust these "averages" for your own unique lifestyle, family history and longevity, smoking history, etc.
When the Husband Passes Away
Once the husband passes away, his spouse will continue receiving some benefits but they will be reduced. Most of those receiving a defined benefit pension payout (such as a military retirement pension) will see that payment reduced in half, or it may go away all together. Social Security will continue for the surviving spouse only at the highest benefit level and any second lower benefit payment will end. This type of reduction in household income is likely to have a significant impact on quality of life. In fact, according to a recent Life Insurance and Market Research Association publication on the Need and Value of Life Insurance, one to two years after a spouse's death almost 50 percent of respondents were just getting by financially, and 45 percent of widows said their spouse did not have adequate life insurance. This study strongly illustrates how important it is to make sure enough assets, both investments and insurance, are available to provide the income needed. A permanent life insurance policy can help supplement income for the surviving spouse.
Provide Protection with Permanent Life Insurance
The concept behind permanent life insurance is simple -- to provide the protection of life insurance to your survivors for your whole life. This is why it is often called whole-life insurance. So, no matter what age an individual passes away, the death benefit will be there to help provide for the spouse. During the course of the insured life, this type of insurance offers the benefit of tax-deferred growth on an ever-increasing cash-value account and a death benefit that can increase over time. Navy Mutual compares most favorably to other insurers who have similar policies by providing a high crediting rate (interest rate paid on the cash value) and low costs of insurance that maximizes the growth of the cash value and death benefit. In addition, Permanent 'Plus' has no surrender fees, no commissions, and guarantees the return of 100% of your premiums!
For more details on how Permanent 'Plus' fits into your financial plan, click here or call a Membership Representative at 800-628-6011.
Navy Mutual offers flexibility to the surviving spouse through the settlement options for the life insurance benefit. Which type of settlement option is chosen will have an impact on the amount of income the spouse has coming in on a regular basis. For example, life insurance death benefit proceeds may be received as a lump sum or may be distributed under one of our various settlement options. Navy Mutual maintains three types of settlement options:
- Fixed Period
- Interest Only
- Life Income
Each option contains its own unique features. Review the different options available and determine which one provides the supplemental income needed to match the spouses' longer life expectancy and how much flexibility may be needed to make random cash withdrawals. This probably will not be an easy conversation to have, but it is vitally important to your wife, and will provide both of you with peace of mind.
