To Buy or Not to Buy: Life Insurance During Retirement

Life insurance is one of those things which you only start worrying about once you’ve already built a family. During the start of your career, you lived only for yourself. That is to say, you didn’t have any dependents to worry about or debts to settle. So throughout a portion, if not all throughout, your twenties, you didn’t need life insurance and purchasing a policy wasn’t a serious consideration until you had gotten married, had kids and purchased a home. Upon retirement, it’s safe to say that your children have all grown up and you’ve already paid that mortgage on your house. Question now is: does a life insurance policy still make sense once you’ve gone into retirement?

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Here are a few factors to consider when choosing to drop or buy a policy:

Debts

By the time you’ve retired, chances are that you no longer have any existing debts or maybe they aren’t as substantial as they were ten years ago. You might have accumulated a few more assets and your net worth could be higher now as compared to when you were still working. If this is the picture your seeing right now, the scenario that you have to think about now is: should you die soon, will you be able to leave your partner enough assets to keep him or her comfortable?

Estate Planning

One of the things which life insurance policies take care of aside from making sure that your dependents are left with enough to live comfortably with is having enough for any transfer or estate taxes. Without any assets that can cover the costs nor life insurance coverage, your beneficiaries may have to sell your estate to pay for taxes.

Gifting Charities

If you want to leave behind a legacy gift to your favorite charitable institution, continuing your existing life insurance policy or purchasing one now can be the way to go. Doing this will require you to name the foundation or organization as the beneficiary for your policy.

Type of Insurance

You probably know by now that there are two types of life insurance policies – whole life and term. Term insurance provides coverage within a certain time period like 10 or 20 years. If you want to continue the policy, you can choose to renew the policy after the term expires but be sure that the premiums increase as you age. Once you hit 60, the premium will most likely be prohibitively high. On the other hand, whole life insurance offers premiums at constant amounts and includes an investment portion which you can withdraw by the time the policy matures.

Brian Foster is an underwriter for 20 years. He writes and shares his thoughts about insurance comparison.

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