Retirement Insurance You Should Consider

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Planning for retirement is all about security, and making sure you have the financial means to live out a long and healthy life in retirement.  Retirement insurance can play an important role in retirement, and often times can be substantially less expensive if you pay for it early, rather than waiting until later in life when you may present a higher risk to insurance companies.

What’s the Gist?

There are certain types of insurance that most of us think about as a matter of routine, like health and life insurance.  We have seen these types of insurance offered our entire life, and whether or not you purchase them, most people by and large understand the benefit of having them.  But as we move closer to retirement age, and are simply getting older, there are some insurance products that you might start to consider that will add some level of security as you age.

Let’s go over some of the types of insurance you will be looking at, starting from the most basic, to those that require some additional forethought.

Health Insurance

One of the most critical types of retirement insurance is obviously to cover health.  With the Affordable Care Act being such a new system, it’s beneficial to take a look at routine healthcare insurance, as there are some changes after hitting 65 or getting access to retirement insurance.

Retiring before 65

According to healthcare.gov, if you retire before the age of 65 and lose the health insurance coverage you had through the job, then you can buy a plan through the marketplace.  Losing this health coverage entitles you to enroll through a Special Enrollment period instead of the standard annual enrollment period.

Based on income requirement both at the national and state level, you will find out if you qualify for tax credits, and/or a low cost Medicaid program through your state.

Retired with Health Benefits

If you have retiree health benefits then you can continue with those health benefits, or you can opt to purchase a plan through the marketplace.  There are a couple drawbacks of dropping your retiree health benefits according to healthcare.gov.  First, if you are enrolled in the retiree health coverage and opt to drop it in favor of a marketplace plan, then you are not eligible for premium tax credits.  That said, if you are eligible, but not enrolled in retiree health benefits, then you are still eligible for the premium tax credit.

Also, if you drop your retiree health coverage after being enrolled, then you do not qualify for the Special Enrollment Period, and will have to wait until the following years Open Enrollment Period.

Life Insurance

Most people over the age of 40 have given life insurance some thought.  If you haven’t, chances are you should consider thinking about a plan as a part of your retirement insurance package.  Life insurance as we age, and move into retirement years is a very important financial tool to ensure our loved ones are taken care of in the event you are not around to provide financial means.

Life insurance is most important for those with a significant number of dependents whom are supported through your income, and any life insurance plan should be purchased with the needs of those others in mind, and what they may need in order to continuing paying bills.

However, even in the event you do not have dependents, life insurance can still be a nice tool to ensure that any loved ones are not left paying for all of the funeral bills, etc.

Long Term Care Insurance

Another very important type of retirement insurance to consider as you approach retirement age is Long Term Care Insurance.  This is especially important today since life expectancy is so long, and the odds of some sort of long term care situation is relatively common.  In fact planning for long term care can be one of the more important parts of your overall retirement plan as it can carry a heavy financial burden late in the retirement lifecycle.

As you would expect, long term care insurance is there to protect against a steep rise in medical cost due to an individuals inability to carry out daily tasks on their own.  Fidelity estimates that a couple retiring at age 65 would pay $130,000 in long term care premiums, but that’s actually not a bad deal considering the costs of self funding a long term care situation can hit six figures in a single calendar year.

An important thing to keep in mind when it comes to long term care insurance is that customers typically have to “health qualify”, which makes some sense because insurance companies don’t want to insure someone who they already know has a major health issue.  Therefore, you should consider purchasing this insurance sometime in your mid-50’s, hopefully while you are in good health, which should buy you a better plan with lower premiums.


Disability Insurance is typically reserved for people still in the workforce, but as we discussed in our Great Retirement Jobs article, it’s not uncommon for sometime of income producing job to part of a retirement plan these days.

Disability insurance is to help protect an issue occurring on the job that would eliminate or reduce your ability to collect income from your job.  In this event, disability insurance acts as an income replacement tool.

Disability insurance is probably not as important to most people in retirement as the others discussed, but is still something you should keep in mind, and discuss with an adviser, especially if you will continue working.

The Conclusion

Insurance is an important part of a well rounded retirement plan.  Some types of insurance may be familiar to you throughout life, and will continue with you into retirement.  Albeit even those such as standard health insurance will most likely change drastically in how they are implemented.

Beyond those standard insurances however, there are a number of very important insurance tools that can be used to help offload some of the financial burdens as you move into your retirement years.

You should speak to a knowledgeable adviser who can layout your options, and come up with a personalized plan for what type of insurance you should be looking for in your retirement years.


Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines, or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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