Life insurance after retirement – Should you go for it?

Everyone comes across this question at the time of retirement – whether or not they require life insurance policy. It is quite difficult to decide whether or not you need to continue with your life insurance after retirement. You need to assess your financial status and take into consideration a number of factors in order to decide it. Read on to find on what circumstances you may require to continue with your life insurance and when it’s not an absolute necessity to purchase a life insurance.

When you may require a life insurance

You may think of continuing with your life insurance policy under the following circumstances.

• Family is dependent on your incomeIt may happen that you continue earning even after retirement and your family (your spouse and children) is dependent on your income. In such a situation, your family will suffer a substantial financial loss in the event of your death. Therefore, you may consider renewing your life insurance policy so that they get the benefits in your absence.

However, if you have a steady retirement income from your investments, then you can do without a life insurance after retirement. The income is supposed to continue in the event of death of either spouse.

• Want to donate for a charitable causeHave you always wanted to donate a certain amount for a charitable cause? Here is your opportunity. You can have a life insurance so that a charity gets the policy proceeds upon your death.

You can also make your family member/members the beneficiaries of your policy. They will surely appreciate the benefit. At least, the policy will take care of the burial and funeral expenses. Thus, even if your family’s income doesn’t get affected in the event of your death, you may still consider having a life insurance in order to benefit others.

• Continuing to pay off a huge debtYou should also consider renewing your term life insurance if you’re still on the process of repaying huge debt/debts, such as, a mortgage. In such a situation, the cash value of your life insurance policy may be utilized to repay the balance amount if you suddenly pass away without paying off your debt/debts.

• Huge tax burdenIf you own a comparatively large real estate, then it may be a tax burden for your family members. However, a life insurance may help them to continue paying the required real estate tax and stay at the property.

Apart from above, many people want to continue their life insurance policy in order to get some kind of return for their beneficiary/beneficiaries as they have invested a lot of money into it.

The type and amount of life insurance you need

After evaluating the above factors, have you made up your mind to continue with life insurance after retirement? If yes, then you’ll have to decide the type and the amount of insurance you should purchase. Check out the following points to know how to take the decision.

• Calculating the required amount: You need to calculate what amount of money your family would need in order to continue without experiencing a monetary loss. This should be the required amount of your life insurance policy.

• Determining the type of insurance: Next, you need to consider whether to go for a term insurance or a permanent life insurance policy. If you want to keep the insurance longer, then it is advisable that you buy a permanent life insurance. Though you’ll have to pay comparatively high premium, yet the insurance will provide your family with the cash that can be used for various purposes.

If you go for a permanent life insurance after retirement, then you may also stop paying premiums after a certain time. The cash value of the policy will support it for the rest of your life.