Should You Cancel Life Insurance at Retirement?
Should I Cancel My Life Insurance When I Retire?
The light at the end of the tunnel. The Big Day ? Your Last Day. We all work so hard to get retired that sometimes that there isn?t time to fully think through all the financial changes. We?ve all been taught to get rid of unnecessary expenses but what about life insurance premiums? Should we continue to keep paying?
We suggest that most people review two things when it comes to their life insurance going into retirement.
First, seek advice on how much coverage is actually needed. Perhaps your need for coverage has actually gone down now that children are out of the house. Perhaps your need has gone up because you are using the life insurance as a fall back in the event you die and no pension is left to your spouse. Inflation and your expected longevity (or lack thereof) also plays a role.
There are a few questions you can ask yourself to determine a rough amount of appropriate coverage. In the event of death, do I want to
? pay off my house for my spouse or heirs?
? pay off additional debts?
? pay for the cost of a funeral?
? pay a set amount of monthly money to my spouse since some of my other benefits (pension, social security, etc.)
If the answer to any of these questions is ?yes?, then likely you need some type of life insurance.
Second, we suggest that you determine what type of coverage is most appropriate given your new situation. Term insurance is less expensive but goes away after a time. Universal and whole life are more expensive, but build a cash value and are intended to cover you for longer periods of time. Variable universal life is an investment geared cash value type of coverage which also may be worth exploring.
A few last tips:
? If you have cash value built up in a policy already, you will want to evaluate your status. Typically keeping that type of coverage or decreasing your face value amount down to a paid up policy is a way to continue coverage but decrease your expenses going into retirement.
? If you have term insurance, you may want to check to be sure you?ve got coverage that will extend for the period of time you want and perhaps add on some options to purchase additional insurance (or convert it to permanent cash value insurance) with no physical exam.
The bottom line is that life insurance, even in retirement, can play a major role in the whole financial planning process.
The light at the end of the tunnel. The Big Day ? Your Last Day. We all work so hard to get retired that sometimes that there isn?t time to fully think through all the financial changes. We?ve all been taught to get rid of unnecessary expenses but what about life insurance premiums? Should we continue to keep paying?
We suggest that most people review two things when it comes to their life insurance going into retirement.
First, seek advice on how much coverage is actually needed. Perhaps your need for coverage has actually gone down now that children are out of the house. Perhaps your need has gone up because you are using the life insurance as a fall back in the event you die and no pension is left to your spouse. Inflation and your expected longevity (or lack thereof) also plays a role.
There are a few questions you can ask yourself to determine a rough amount of appropriate coverage. In the event of death, do I want to
? pay off my house for my spouse or heirs?
? pay off additional debts?
? pay for the cost of a funeral?
? pay a set amount of monthly money to my spouse since some of my other benefits (pension, social security, etc.)
If the answer to any of these questions is ?yes?, then likely you need some type of life insurance.
Second, we suggest that you determine what type of coverage is most appropriate given your new situation. Term insurance is less expensive but goes away after a time. Universal and whole life are more expensive, but build a cash value and are intended to cover you for longer periods of time. Variable universal life is an investment geared cash value type of coverage which also may be worth exploring.
A few last tips:
? If you have cash value built up in a policy already, you will want to evaluate your status. Typically keeping that type of coverage or decreasing your face value amount down to a paid up policy is a way to continue coverage but decrease your expenses going into retirement.
? If you have term insurance, you may want to check to be sure you?ve got coverage that will extend for the period of time you want and perhaps add on some options to purchase additional insurance (or convert it to permanent cash value insurance) with no physical exam.
The bottom line is that life insurance, even in retirement, can play a major role in the whole financial planning process.
posted by Shari Burnum @ 3:06 PM
