Life insurance for retirees works like most fixed-term or permanent contracts: when you die, the death benefit is designed to help you replace your income and help your beneficiaries pay your final expenses. If you retire, you risk losing the life insurance plan offered by your employer. Therefore, you should consider buying your own plan. Having your own life insurance policy is a good idea if you have debts like a mortgage or a spouse who is financially dependent on you.
Whether you are retiring or recently retiring, there are a few things to consider when purchasing life insurance:
- The cost of the policy.
- The duration of the policy
- The present value characteristic of a permanent policy
HOW MUCH LIFE INSURANCE CAN I OFFER?
Your goal is probably to choose life insurance that fits your retirement budget, but CNN Money says that the premiums for a new policy are likely to be much higher than when you were young. Long-term life insurance is generally more expensive than risk insurance. Indeed, it has a cash value component and stays with you as long as you live as long as your premiums are paid.
According to CNN Money, risk insurance can also cost more with age. However, as you approach retirement, you may be able to survive in a shorter period of time (the period for which your insurance remains in effect, such as 10 years) to buy a cheaper policy.
Some life insurance plans offer fixed premiums and death benefits. If you have a fixed retirement income, you can avoid unexpected increases.
How long do I need a life insurance policy after I leave?
Even if you feel secure in retirement, your wealth may need to last for many years. Depending on your lifestyle and health care costs, you may end up spending a lot of your savings and investments. While you don't have to worry about spending after your death, your surviving spouse, adult children or grandchildren could, especially if they are financially dependent on you.
According to LifeHappens, your specific circumstances may help determine the term of the policy you have selected. For example, if you have 10 years left on your mortgage and it is difficult for your spouse to pay this payment yourself, you can choose a term policy that ends when your mortgage is canceled. If you have adult children or grandchildren whose financial support depends on you indefinitely, you can choose a longer-term policy.
DO I NEED AN EMERGENCY SOURCE OF FUNDS?
It is difficult to know what unforeseen financial needs may arise during your retirement years. Most types of permanent life insurance include the cash value feature, which can be used as a source of emergency savings that you can access while you are alive.
You may be able to get a loan for the cash value of your policy. For example, if you are facing a medical crisis that does not fully cover your health insurance, you may be able to borrow your cash value to pay for your expenses. An emergency source of money can be helpful if you have a steady income. Wondering what type of life insurance could help you reach your specific retirement financial goals? An experienced life insurance representative can help you make the decision.