Do you need life insurance after retirement?
Now, that’s a good question. You get life insurance when you want to cover your mortgage and make sure your children have the resources they need growing up. But what about later, once you retire? Do you keep the same life insurance? Get more? Downsize your insurance when you downsize your real estate? Let’s take a look at your options and what to consider as you make these decisions.
Life insurance after retirement
As you look forward to retirement, or if you have already retired, it makes sense that your retirement income is less than your working income. Expenses go down, too, when you’re not commuting, keeping up a work wardrobe, and saving for retirement. You might even have paid off your mortgage or downsize to live with less mortgage or be mortgage-free.
But you have some life insurance, and that’s a bill to pay every month (or year.) Should you cash in your permanent insurance? Let your term insurance policy expire? Or should you get a policy if you don’t have one… or buy more life insurance if you do.
Unfortunately, there isn’t a cut and dried answer for everyone. Your situation is unique, so your need for life insurance is unique, too.
We recommend you get professional advice, but here are some questions to consider as you look at your options.
What is your life insurance going to be used for?
The reason to buy life insurance is to protect any loved ones that depend on you and your income. Life insurance also protects your business and business partners. It can help pay for your funeral, which could be up to $10,000. But when you retire and no longer have an income, what is the point?
- Where does your retirement income come from?
- Will your death make a difference to that income?
- Will your family have enough without that income if it decreases or goes away entirely?
If you haven’t used up all your retirement savings before you die, you can pass those funds along. After doing the paperwork, your surviving spouse inherits your retirement savings. You can also leave some of your savings to your children.
Your company pension or life annuity may stop paying out on your death. Sometimes you can arrange a smaller income with a survivor payment.
Your family home, other real estate, or non-registered investments remain after your death, but tax situations may change. Reach out to us to help you navigate the potential expenses that a life insurance policy may cover for your surviving family members.
If you have a mortgage or other debt, like a car loan, life insurance could help your spouse by paying off those debts for a clean slate.
If your spouse or other family members need additional income to maintain the lifestyle you provide, life insurance will help them. This is especially important if you have been helping to support grandchildren or a person with a disability.
Consider a life insurance policy to equalize your estate’s value among your children. If you leave an asset, like real estate or your business, to one child, cash from a life insurance policy can create more fairness and equality.
Conclusion
Reach out today for professional advice if you wonder about your life insurance policies in retirement. Our experts are here to help.
