Benefits of Keeping Life Insurance in Retirement

One of the questions I often get from clients who are planning on retiring is whether they should maintain their life insurance. Normally, one might think that that they do not need life insurance in retirement because life insurance is designed to protect against financial loss, and if you have enough money to retire, why would you need it? But, in certain situations, there are good and valid reasons to continue your life insurance during your retirement: 

  1. To protect your heirs from the loss or reduction of your pension income when you die. If you elected a pension income option that stops or decreases dramatically when you die and you have others depending on receiving that income, you may want to retain some life insurance. 
  2.  To cover unforeseen medical or end-of-life costs and help protect those surviving you from these unexpected and often large expenses.
  3. To help pay estate taxes on large estates or If the insurance is funding a liquidity need such as in the case of a buy sell agreement between owners of a business.
  4. To use as an additional inheritance for your kids or grandkids, or to help fund the long-term care and support for a disabled child. 
  5. To leave the death benefit to a favorite charity. 
  6. To fund all or part of your long-term care insurance. If you have a type of permanent insurance life insurance policy with cash value and you have a need for long-term care insurance, you may be able to fund all or part of your long-term insurance coverage need by exchanging your life insurance policy tax-free to a hybrid life insurance policy that provides long-term care insurance benefits.

Everyone’s situation is unique and the decision of whether to continue your life insurance in retirement is totally dependent on your situation and goals. To learn about the options available and to discuss how they may best fit your needs, call us.