Life Insurance

Do You Really Need Life Insurance In Retirement?

“I hate life insurance!”
Have you ever said that?   Many people do.  But maybe it’s not the insurance itself that people dislike.  Maybe it’s actually (1) high pressure sales tactics and (2) the feeling they get afterwards wondering if they might have made a poor decision.

Life changes in retirement

Your need for family protection might have diminished somewhat by the time you reach retirement age.  For one thing, your children are (hopefully) financially independent from you.  If you have an established retirement income that meets the needs of the two of you, and if that income will continue on for the survivor, then that income will likely be just as adequate for one as it was for two.

Hold it!  Don’t drop that life insurance yet.

There are a number of good reasons to keep life insurance during retirement, as long as the cost does not get unreasonable.  So before you let your life insurance expire, consider these alternatives:

• If it is a permanent policy (i.e. not term insurance), you might transfer it to an Irrevocable Life Insurance Trust where it can be exempt from estate tax and the proceeds can be earmarked as a tax-free inheritance for your heirs.
• If you have a monthly pension income without an adequate survivor benefit, then the life insurance proceeds might come in handy as a replacement for those lost benefits.
• You can sometimes sell a life insurance policy – even a term policy.  Talk with us about this possibility.

Our recommendation is that as you approach retirement, you talk with us about your specific life insurance situation to make sure that you make an informed decision.