Longevity Insurance

(Everything you need to know - and more)

Joint Life Annuity

Americans are living longer and retiring earlier. According to data collected by Merrill Lynch and Age Wave, the average retirement age was 70 in 1950; by 2010, that had decreased to 64.  This trend is worrisome for younger people, because some traditional sources of retirement income are not expected to be available to them.

The data collected showed that in 2014:

  • 53% of the Silent Generation (those 69 to 89) said they counted on Social Security to provide their income in retirement.
  • 26% of the Millennials (those 25 to 37) said they would rely on the program.
  • The same number of Millennials (26%) said they would work during their retirement years.
  • Only 5% of those 69 and older said they would work.
  • While more than 20% of those 50 and older can and have counted on employer-sponsored pension funds in retirement, less than 12% of Millennials say this income is available to them.

According to the World Bank, the average life expectancy at birth in 2013 in the United States was about 79 years, and more and more people are living well into their 80s. 

In fact, America’s population aged 90 and older has almost tripled since 1980, reaching 1.9 million in 2010. It will continue to increase to more than 7.6 million over the next 40 years, according to a new report from the U.S. Census Bureau.

As life expectancy rises, a growing number of Americans spend more years in retirement than they planned for, which exposes them to the risk of outliving their assets and illustrates the importance of savings and investments. 

One tool that can be used to address this possible outcome is longevity insurance, which can help protect your other forms of savings and income in your golden years.

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How Longevity Insurance Helps Replenish Funds after Retirement

Also known as an advanced life deferred annuity, longevity insurance is intended to provide guaranteed income for life once the policyholder reaches an age when other retirement funds may be mostly depleted. 

Deferred is the key word. A regular, immediate annuity begins making payments soon after you buy it; a deferred annuity’s payout typically begins 10 or 20 years in the future.

For example, a man who pays $40,000 for a longevity insurance policy at age 50 may receive annual income of about $33,000 once he reaches age 85. He would receive about half that amount – around $12,000 per year – if he purchased the same contract at age 60, and roughly $5,500 if he bought it at 65. 

Female policyholders receive slightly less, since they have longer life spans. As you can see, the younger you are when you purchase longevity insurance, the better the investment becomes. To counter the erosive effects of inflation, some insurance companies offer longevity products with an inflation hedge for a higher investment.

Some people believe they can work well into retirement to keep a revenue stream flowing. More people are indeed working during their retirement years. According to the Bureau of Labor and Statistics, 41% of those 55 and older worked during the 1960s. 

That number dropped to 32% by 2000, only to return to 40% by 2014. Unfortunately, our marketable skills become outdated as we age, and health issues may prevent us from being employable. A longevity insurance policy can guarantee you an annual income in the event you can no longer work.

Who Should Buy Longevity Insurance?

Those who are not expected to have guaranteed income in retirement, those in danger of depleting their nest eggs in old age, and those with a family history of living into their 90s are good candidates for longevity insurance products. 

As the costs of health care rise at a seemingly never-ending pace and the need for long term care in old age increases, a longevity insurance policy can mean the difference between comfortable retirement and living in poverty.

Older Americans’ chances of requiring nursing home care increase rapidly with age. While only about 1% of people in their late 60s and 3% in their late 70s live in nursing homes, the proportion jumps to about 20% for those in their early 90s, more than 30% for those in their late 90s, and nearly 40%  for people 100 and older, according to census data.

Unfortunately, old age and disability still go hand-in-hand. According to census data:

  • 98.2% of people in their 90s who live in nursing homes have disabilities.
  • 80.8% of people in their 90s who do not live in nursing homes also have one or more disabilities.
  • Overall, the proportion of people age 90 to 94 with disabilities is more than 13 percentage points higher than that of those 85 to 89.

Dementia, one of the most common disabilities developed in old age, can cause people to mismanage their other forms of retirement income. 

Sadly, it can also leave people vulnerable to others taking advantage of them and depleting their accounts. A longevity insurance policy can guard against such risks by locking up those funds until you need them.


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Where Can I Find the Right Longevity Insurance Policy?

Living longer and retiring earlier allows many people to lead full, rich lives in their golden years. The last thing you want to worry about is whether you will deplete your assets and savings long before you’re ready. You want a longevity insurance policy that will protect you when you are most vulnerable.

Because longevity insurance is a form of an annuity investment, you don’t want to shop for this product yourself. You also don’t want some faceless text box on a website giving you retirement planning advice. 

You want a knowledgeable, experienced insurance agent who can help you navigate the various products available that would best meet your needs. Our insurance agents are always available to answer any questions you may have and assist you in comparing a number of longevity insurance quotes from a variety of companies. 

These local agents are able to find you the best policy and the most affordable longevity insurance rates, ensuring you can retire with peace of mind, knowing you made a wise investment. Contact an agent in your area today.  

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