In an earlier blog, we discussed the strategy of using life insurance as an aid in retirement planning, a practice that has grown more popular in recent years as more people have begun to worry about their retirement prospects. In fact, retirement is one of the most common concerns across multiple generations today.
While saving for retirement is important, it’s far from the only way in which retirement and life insurance interact. As we’ve discussed in previous posts, your life insurance is directly tied to your life situation, and retirement is a major life change for just about everyone. How will retirement affect your life insurance policy? Let us explain the transition to you.
Uses for Life Insurance in Retirement
Many people have recently begun prioritizing their life insurance in the years leading up to their retirement as a savings mechanism, but your life insurance doesn’t immediately lose its utility once you’ve retired. If you:
- Need to cover final expenses
- Have children or other dependents that you need to provide for
- Were forced to retire before you were financially able (such as due to injury)
- Are expecting hefty estate and inheritance taxes and settlement costs on what you’re planning to leave behind
- Need to replace pension or Social Security benefits (as your loved ones will no longer receive these once you’ve passed)
- Have mortgages or debts that you would not like to pass on
- Were previously covered by your employer’s insurance
- Would like to replace your income
Life insurance is a necessity.
Buying a Policy
Let’s say that you’ve made it to retirement or to advanced age without having purchased a life insurance policy. This is not the ideal situation for purchasing life insurance, but it’s never too late to purchase life insurance. If you need to buy a policy, your first step should be to contact your agent. You don’t become uninsurable when you reach retirement, but it may be more difficult to secure the right amount of coverage, and an agent can help you to navigate those waters. If you’re uninsured but still have significant expenses or have taken a pay-out on your pension, we recommend securing yourself with a policy.
Changing Your Coverage
As we discussed last month, there may come a time in your life when it would be best for you to change your life insurance coverage, and retirement, as a major financial change, would be an example of one of those times.
As you enter retirement, ask yourself (and your agent) these questions about your life insurance:
- Do I still need the death benefit? By this point, you might have other assets that can contribute towards your loved ones’ futures and your end of life.
- Is it still financially wise for me? For many people, their income and finances drastically change in retirement. Look at your premium cost and your overall finances and think about whether it would still fit into your budget. If not, you may want to adjust your coverage to better suit your finances.
- Are my needs covered? In retirement, you still have many needs, and once your previous source of income has gone away, you might find that your pre-existing coverage does not sufficiently cover all of your needs. In that case, you might need to expand your policy.
About National Catholic Society of Foresters
At National Catholic Society of Foresters, we pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. Sales from our financial services products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs. Our portfolio is extensive, ranging from various life insurance policies to IRA’s to support your financial needs no matter what stage of life you’re in. For more information, contact our friendly experts today at (855) 804-7424.