Several questions arise as you near retirement concerning your life insurance needs.
Should you keep that existing policy in place? If so, should you change the coverage amount?
What if you don’t have any life insurance because you lost your group coverage at work (even though some employers let you keep the coverage at your own expense)?
Should you go out and buy life insurance as you near retirement?
The answers depend largely on your particular circumstances.
If you’re married, you want to make sure that your spouse will have enough money when you die. You may also have children and other heirs you want to take care of.
Life insurance can be one way to accomplish these goals, but your life insurance needs may not be as great during retirement because your financial picture may have improved.
When you’re working and raising a family, the loss of your job income could be devastating. You often need life insurance to replace that income, meet your outstanding debts, for example your mortgage, car loans, credit cards, or funding your children’s college education in case something happens to you. But after you retire, there’s usually no significant job income to protect. Plus, your kids may be grown and most of your debts paid off. You may even be financially secure enough to provide for your loved ones without insurance.
It may make sense to go without life insurance in these cases, especially if you have term life insurance and your premium has increased dramatically. But what if you still have financial obligations and few assets of your own? Or what if you’re looking for a way to pay your estate tax bill? Then you may want to keep your coverage in force or buy coverage, if you have none.
If you need life insurance, but not as much as you have now, you can always lower your coverage amount. It’s best to talk to a professional before making any decisions. He or she can help you weigh your needs against the cost of coverage.