Have you or your spouse wondered about whether or not you really need retirement life insurance lately?
It’s a very common question for retirees and pre-retirees to discuss amongst themselves and their financial advisors, and for a good reason. Is it the right time to let go of life insurance altogether or is it time to simply modify it?
We answer the most common questions about retirement life insurance below, and provide a little insight on what you may want to consider before making any changes.
The most important thing to remember is what you need to cover, and for how long. This will ultimately make the decision for you.
Retirement Life Insurance: Yes or No?
Retirement is a financial puzzle. Every piece needs to fit together to make sure you have the stability, the growth and the protection you need now and into the future. With an unknown time horizon, it’s difficult to discern what financial products will provide you the durability you need both now and even decades down the road.
Retirement life insurance is one of those products.
In evaluating your personal situation, there are a few questions you’ll need to ask yourself to see if you need any life insurance at all during your retirement years. Not everyone needs it, so don’t feel obligated to have it. Life insurance is simply a financial tool for leverage, nothing more. How you leverage your assets with life insurance is a different story. We could also direct to companies who offer decreasing term life insurance, should that be something you are interested in.
Here are a few questions you’ll want to ask yourself to see whether or not life insurance will play an important role in your retirement years:
- When you die, will you be passing along debts where someone else will be required to foot the bill?
- Is there someone who depends on your current income who would no longer receive this income later?
- Do you have aspirations to leave a monetary gift to someone after you die, like to a charity or for family legacy?
- Are there liquid assets available which can pay for your final needs and final bills?
These questions unveil the most obvious things life insurance typically covers: debt, income, gifting and final needs. While you may not have answers to each of them right now, it’s still something you need to consider as life insurance becomes more expensive as you age; buying life insurance now will always be cheaper than later, all things being equal.
Types of Retirement Life Insurance Policies
If you do have a possible need for one of the big four mentioned above, be aware there are different types of policies to help hedge against each of those liabilities. You need to take into account both the amount of coverage needed, and for how long you’ll need to be covered for. Maybe you need a small amount of coverage or perhaps a million dollar insurance policy or term life insurance for those with health issues. Whatever the need, we can help.
A short duration obligation would be most fitting for a term life insurance policy, while a long duration (or even permanent) need for life insurance in retirement fits the bill for whole or universal life.
Having said that, a permanent policy for a very high coverage amount may not be affordable, so consider your budget before anything else. There is no point in paying high premium dollars for several years only to lapse the policy because you can no longer afford it. This only wastes money.
If you can put a definite time frame on an obligation, a term or universal policy can likely be matched to go exactly as far as you need it to go. For example, if you still have 13 years left on your mortgage, the most you’ll need is a 15-year term policy.
If you can’t put an ending point on a possible retirement life insurance need, like the cost of burial, a small whole life policy may do just fine. They last as long as you do, and are guaranteed to pay out as long as you maintain your premiums.
Have questions still?
Contact us and we’ll be happy to help you find the most affordable way to meet your needs of retirement life insurance. Our goal is to save you time and money. Retirement is supposed to be enjoyed, so let us take the worry out of your retirement life insurance purchase.