Who Needs Life Insurance in Retirement?

Many people don’t need much life insurance once they retire; their children have grown up and moved out, and their spouses have enough money to live on from their own pensions, Social Security, or savings.

However, many people do need life insurance after retirement. Take, for example, individuals in the situations listed below:

People who won’t be able to leave sufficient liquid funds to cover their final expenses. Funerals can be costly, and you may not want your family to bear the cost. You can buy a small life insurance policy to cover these final expenses, making it easier for your family at this difficult time.

People with a dependent who won’t have enough money to live on after their death. If your spouse relies on your pension payout and you’ve chosen the life-only payout option (which provides more money during your lifetime, but leaves nothing for your spouse), you may want to consider using some of your extra pension income to buy a life insurance policy for him or her to access after your death.

People who anticipate high estate taxes. If you have an estate in excess of $5 million, you may want to consider buying a life insurance policy to pay the estate taxes that will be due. That way your heirs won’t be stuck with the tax bill-which may be hard for them to pay, especially if your other assets aren’t liquid.

When it comes to life insurance, you have the option of permanent or term: permanent covers you for your entire life; term, for a specific time period.

If, as in the examples above, you don’t need insurance for your entire life, a term policy-which is cheaper than permanent-might be perfect for you.

Your agent will be able to advise you on which kind of life insurance is most appropriate given your individual circumstances.