Before you retire, there are some financial aspects you should consider or reevaluate to be sure you have everything in order. One of those is your life insurance policy. You may wonder if you have the same life insurance needs in retirement as you do prior to retirement. In order to determine this you need to have an understanding of the different types of life insurance, what they are meant to accomplish and what your needs are. Then, you can decide if you need to change your policy or even have one at all.
Term life insurance is the least expensive and most common. The premium terms are generally for ten or twenty years and often these life insurance policies expire around the time of retirement. The problem with renewing a term life insurance is the premium will likely increase greatly based on your increased age. This premium increase may be cost prohibitive and be too expensive to be worth the benefits it will pay out.
Permanent life insurance is an option, especially if you anticipate you will live much longer than the expiration of a term policy. For example, if you are in extremely good health or retire early, you may consider a permanent life insurance policy. However, the premiums for this insurance are much greater than those of the term life counterpart. Even if you are younger and in good health you may find that the cost is not worth the benefit.
Life insurance is meant to assist the surviving members of your family so they can pay for funeral expenses and be able to live comfortably without your income. Instead of struggling when they no longer have your income to rely on they will have the life insurance policy pay out to survive on for a time giving them the ability to become financially secure.
If you retire and your dependent status is greatly changed, though, you may find that your life insurance needs are no longer the same. If your spouse is deceased or if you are divorced, you will only need to consider the future of your children when determining if you need a life insurance policy. If your spouse does not need to count on your income to survive, you may want to decline additional life insurance coverage.
If you have enough available cash on hand to deal with the expenses incurred on your death and to allow your surviving family to use the assets to live, you may also want to consider not renewing a life insurance policy. You may find that the expense far outweighs the possible benefits and the amount of money you spend on premiums is better used in other investments.
If your children are grown and no longer depending on your income, you should again consider not renewing your life insurance policy. Analyze your needs and those of your family before determining if you will need to continue with your life insurance. If you still have dependents who will suffer without the income you provide and you do not have enough available cash you may want to look into another term policy. However, if you have cash reserves and your spouse and children are no longer in need of your income, the premium costs are likely not worth the benefit and you should invest that money elsewhere.
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