Do I Need Life Insurance after Retirement?
Every year, thousands of people who outlive their term life insurance policies face the question of whether or not they should renew it. Although it's recommended that most people have some type of life insurance policy, there might not be much need for one after your current policy expires. Once the term on your policy runs out, you'll probably be near or already into retirement age, at which point there probably aren't too many people relying on you for income anymore. Children are all grown up and you're probably living off retirement investments by now, so why do so many people keep their policy well after they retire? There are a few valid reasons, but surprisingly, many people simply have trouble letting go of their life insurance. They've already put thousands of dollars into it and now they would like to see some kind of return on it for their beneficiaries. Regardless, keeping term life insurance past retirement is usually just a waste. Most financial advisors will tell you that there's no point in using your retirement money for an investment no one needs. Here's some tips for helping you decide whether to renew your term life insurance policy after retirement:
To Insure, or not to Insure
- It may not be an easy thing to consider while you still have so many years ahead of you, but think about whether anyone stands to take a large financial loss after you die. For instance, are you or your spouse still working to provide income? Did you not save enough money for retirement? In either of these cases, it would probably be wise to still maintain a life insurance policy.
- If you do still need a life insurance policy after retirement, remember that it probably doesn't need to be quite as large. Your next policy can likely be considerably smaller, which is a good thing since your rates will be much higher. Also, your new policy shouldn't have to have as long a term either. After all, the price of a 30 year policy at the age of 60 would be out of this world.
- Some people like to maintain their life insurance policy even if their beneficiaries won't truly need the money from it. There's nothing wrong with this and your family will surely appreciate the nice benefit. At the very least, it will take care of any final expenses such as funeral and burial services.
- Rather than renewing a term policy, consider taking out a permanent policy (such as a whole life plan) if you're determined to have life insurance till death. While permanent policies are generally more expensive, they also guarantee that they'll pay out and usually provide larger benefits. Plus premiums for term life insurance are only going to increase as you get older, so you might as well take advantage of a permanent policy.