Retirement is a time for change, for a fresh start, and a time to start making financial decisions regarding your silver years. One of them being, of course, whether you still need life insurance at this stage of your life. How important is life insurance for someone who is already retired, anyway?
The answer to that question can be a bit complicated, since it depends on your financial health at the time of retiring, and on how well your family and other people who depend on you are doing financially.
Let’s start with the basics.
What’s the purpose of life insurance?
When you are the breadwinner of your family, your untimely death isn’t just an emotional tragedy, it is also a financial one. Life insurance exists to mitigate the effects of that tragedy, so that the families of the deceased will have some money to support themselves while they get used to living without the help of the deceased.
That’s one application of life insurance, at least. In fact, there are many types of life insurance, and many ways those policies can be useful.
Whole life insurance, for example, will pay your family a death benefit if you die. However, a lot of life insurance policies also allow you to earn part or the entirety of your death benefit yourself should you ever be diagnosed with a terminal condition. Such a payout can greatly increase your quality of life in your final days, and help your family deal with medical costs and bills.
There are also more specific types of life insurance, such as final expense insurance, which policy is designed to cover the cost of anything associated with your death, including funeral costs, cremation costs, and even last-minute medical bills in some cases. This is also a mechanism that can help make sure your death won’t be a financial burden on others.
These applications of life insurance often go unmentioned when people discuss the topic. And now that you know what life insurance can do, let’s answer the initial question: should you get life insurance after you retire?
Let’s talk about money
Money will be the main thing to consider if you are thinking about paying for a life insurance policy after your retirement. You need to consider your personal financial situation, as well as that of your spouse, and the rest of your family.
If you retired with a good amount of savings, a steady pension, and no debt to your name, then you likely do not need a life insurance policy anymore. At this stage, your biggest concerns will be having a will and making sure your family members won’t bicker over your money when you are gone.
On the other hand, if you do not have a lot of money saved, are still paying for your mortgage, and have children or grandchildren that are still financially dependent on you, then having a life insurance policy might be a good idea. In this scenario, life insurance can fulfill its intended purpose — it’ll make sure your family’s financial situation doesn’t fall apart if something unexpected happens to you.