Retirement Planning

Do You Still Need Life Insurance in Retirement?

Many of us think that once we retire, we don't need life insurance. Depending on your circumstances and your dependents, that may not be the case.

Keeping Your Life Insurance in Retirement

Wondering if you still need life insurance once the mortgage is paid off and the kids are out of the house? If you're contemplating canceling your life insurance now that you're headed into retirement, you might want to hold off until you've considered the following to determine if foregoing life insurance in your golden years is a good idea.

Dependents

During retirement, you're living a lifestyle that's supported by what you've managed to save over the years, as well as other benefits. But even though the kids have left the nest and are now leading independent lives, you may have a partner or spouse who depends on you for financial support. For example, do you plan on working part-time in retirement to help supplement your income? If you were gone, would your surviving partner or spouse have enough income to meet daily expenses? 

If you don't think you have enough retirement savings, you may not want to cancel your life insurance policy. Now's the time to review all of your retirement accounts to determine if your partner or spouse would have enough in retirement assets to meet cost of living expenses should you die unexpectedly. If you find there would be a significant income gap upon your death, then life insurance can help fill the void.  

Other considerations would be a special needs dependent. If you have a child or other family member who requires special care, continuing your life insurance policy can ensure that their ongoing needs will be met long after you're gone.

Final expenses

Another way to preserve your retirement funds for a partner or spouse, is by having enough life insurance to cover funeral and burial costs, as well as outstanding medical bills. Leaving your significant other with enough readily available cash to cover your final expenses allows them to better preserve their retirement savings by not having to liquidate assets. If cost is a factor, consider a smaller policy or joint life insurance. A smaller term policy will cost less, and joint life insurance (also known as first-to-die insurance) will benefit the surviving spouse.

Estate taxes

If you have a high net worth, a large estate, or own a flourishing business, your estate may be subject to estate taxes. The fact is, as the value of your estate increases, so does your potential for an increased tax liability that will continue to grow over time. Keeping your life insurance policy in retirement can provide your family with the immediate cash to cover estate taxes so they won't be forced to liquidate assets in order to cover a potentially large tax bill.

There are many ways that life insurance can help you in retirement. As part of a solid financial plan it's always a good idea to talk to a qualified financial advisor or life insurance professional who can help you determine the best life insurance plan to meet your retirement and estate planning needs.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

Retirement Planning

Life insurance can be a vital part of a solid retirement plan and estate plan. So if you're thinking of canceling your life insurance policy once you are in retirement, you might want to reconsider. There are many benefits to keeping your life insurance policy going into retirement, including supplementing the income of a surviving spouse, providing funds for a special needs child, covering estate taxes, and to provide readily available cash for final expenses. For more information, visit the Protective learning center.

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