While you were working and supporting a family, it’s likely you carried some sort of life insurance either through a policy you took out yourself, or through life insurance provided via your employer compensation package. But now that you’ve retired, it’s a logical question to wonder if you still need to carry life insurance, or whether something like Final Expense Insurance is a better choice.
Like all things involving life insurance, the question of whether you need it after you retire is dependent on different factors. For most of us, assuming the number of dependents you have in the house have decreased, and your savings has substantially increased, the amount of life insurance you need after retirement will have at least gone done quite a bit. Let’s go over some of the major factors that may dictate if you need to continue carrying life insurance after you retire?
Do You Have Dependents?
Without question, and quite obviously, this is one of the major reasons you carried life insurance in your working years. You had a family who was dependent on your income in order to cover everyday living expenses, and to allow for the savings you hopefully have today that allowed you to retire. For most retirees, many of these responsibilities are gone, which alleviates at least one major concern for carrying life insurance. If all your dependents are out of the house, and/or you are confident the amount of savings you have for retirement takes into account any remaining dependents, then it’s likely life insurance does not need to be a large part of your plan at this point.
Is Your Debt Paid Off?
If you have debt remaining that you don’t want to burden a family member with after your death, then this is another reason you may consider carrying some life insurance in retirement. Ideally you would have most of this debt paid off previous to retirement, but there are many instances, including real estate or other business ventures, that may have lead you to have some debt during retirement.
Are You Planning To Work?
Working in retirement sounds like an oxymoron, but in today’s world, it is very common to continue with some type of income producing work in what you consider your retirement years. Because the heart of a life insurance policy is to replace income during your working years, it may make sense to continue with life insurance if you are working in retirement. It really depends on whether this income is simply a bonus, and is just being generated because you can’t imagine relaxing all day, or if it’s because you still need the income to support your family in some way. If it’s the latter, then it still meets the requirement of income that should possibly be covered through a life insurance policy.
Will You Owe Estate Taxes?
This is a trickier issue and one that should be discussed very closely with a estate planner to identify if a life insurance policy may be beneficial. If you have some type of asset such as a business investment, and you would not have the liquid assets to covert he estate taxes on that investment, a life insurance policy is something that may be considered as part of an overall estate plan. Even if you do have the liquid assets, a life insurance policy could also guard against you needing to sell those liquid assets in a down market.
Do You Receive A Pension?
Many pensions in some way transfer over to your spouse or dependent upon death, but in the event that it does not, a life insurance policy may be a good idea. For all intents and purposes, you are earning income through your pension that is necessary for you and your dependents to live on during retirement. If that income disappears, a life insurance policy can help replace that income.
Life Insurance In Retirement Summary
You’ve made it to retirement, and for many people this means you can comfortably walk away from whatever life insurance policy you’ve carried over the years. That’s a good thing because these policies go up significantly in price as we get older. But for some, and probably a growing number of people, life insurance in some form will still make sense in your retirement years. Whether you are still in need of some sort of income replacement, or it’s an overall part of your estate planning over the long term, life insurance is still something to be considered (although hopefully not needed) during retirement. You can also read our article on other types of retirement insurance that you may want to consider.