Why You Still Need Life Insurance After Retirement

Your kids are on their own, you’ve downsized to a smaller house and said goodbye to the family minivan. Retirement is no longer just a dream and you’re making the most of it. With no more dependents living with you, it’s time to get rid of your life insurance policy along with that minivan, right? Maybe not. While there are arguments for ceasing to fund a life insurance policy after you retire, there are often even more reasons to keep it going. For example:


Reason for Retirees to Keep Life Insurance


Covering Funeral Costs: With funerals costing an average of $7,000 to $10,000, it’s reasonable to consider keeping insurance to cover these expenses alone. If you have enough in your estate to cover this then you might not need the insurance. However, if you don’t, then this amount is enough to devastate your loved ones. Not only will they be dealing with your passing, they’ll now need to gather a fairly large sum of money without the aid of insurance.

Funding Investments and Business Interests: Many people who retire continue to own businesses or have investments in other operations. If this is the case for you, you will want to fund your insurance to make sure your hard work isn’t lost to taxes and other expenses after your passing.

Income for Spouse: Will your spouse be able to survive without your income? The answer to this will largely depend on your personal situation, but oftentimes, if a person passes without leaving an insurance policy, their spouse’s quality of life will suffer.  If you are continuing to generate any kind of income outside of social security during your retirement then this is a good indicator that you will need to replace that upon your passing.

Care of Children: While you are unlikely to have underaged children during retirement, there are still several instances where your income is still needed. If any of your kids or grandkids require ongoing care or assistance for mental or physical issues then life insurance can be a great option to ensure they have the resources they need. A fluctuating economy that often works against young workers may also make an insurance policy very appreciated if not completely necessary for your kids/grandkids.

Taxes and Debt: Estate taxes can give many families sticker shock and force your loved ones to sell off property just to cover them. Similarly, things like credit card debt and loans don’t disappear after your passing and will still need to be paid. Having adequate insurance can mean the difference between your loved ones spending holidays in the family home and having to sell it for a discounted rate quickly just to cover expenses.

Charity Donations: Maintaining a life insurance policy for the express purpose of donating to a charity is a good way to keep the money separate from the rest of your estate and not cause issues among beneficiaries. This may also help reduce the amount that is lost to taxes.


Converting to Term Life Insurance


While having life insurance is most likely to have a positive effect on your estate and shouldn’t be cancelled entirely, you may want to consider converting to a term life policy instead of a whole life one.

Payouts for term life may be less, but the payments will also be less. When you’re retired and may not need as large of an insurance policy to leave behind, this can be a good compromise.


To determine if you still need life insurance and how much, call the experts at Arbor Creek Financial LLC. Our knowledgeable agents will consider your budget, concerns and financial goals when recommending the best insurance options for you. For personalized financial service, call us at 1-866- 462-6526.