NEW YORK, NY / ACCESSWIRE / October 22, 2024 / No matter what age you start planning for retirement, there are a lot of factors to consider, like what age you want to retire, how to ensure you have enough income to cover monthly expenses, how much legacy you can leave for your loved ones, and if you need life insurance.
While some of those considerations require a more in-depth analysis, likely alongside a financial professional, whether you'll need life insurance in retirement comes down to a few key questions. In this article, we'll explore five questions that can help you decide if you'll need life insurance in retirement as well as a few of the best options available.
Can I continue with my existing term or whole life policy?
If you already have a life insurance policy, you may have locked in a favorable rate that you can afford to pay in retirement. And if your existing policy is permanent, like whole or universal life insurance, you may have already secured lifetime coverage. Sometimes, continuing to pay for a permanent life insurance policy or renewing or converting term life insurance coverage is a cost-effective solution to maintain peace of mind that loved ones will be protected during your retirement years.
Some people plan to keep a permanent life insurance policy with the intention to use the cash value while they're alive. As you consider if you'll keep your policy, think about the implications of borrowing against life insurance in retirement. It's important to understand that anything you borrow from cash value without paying back may have an impact on how much death benefit your loved ones will receive.
Will I have debt in retirement?
If you plan on retiring with debt, like a mortgage, auto loan, or credit cards, the death benefit from a life insurance policy can help pay off those debts so the amount won't be deducted from your estate. It's especially important to consider using life insurance to cover debt if your partner or another loved one is a co-signer.
For example, if you and your partner got a mortgage jointly, they'd be responsible for continuing to make monthly payments after you pass. Using the death benefit payout to finish paying off the mortgage may put them in a better financial situation and enable them to keep the home if the unthinkable happens to you.
Will my partner have financial support in my absence?
If you'll be living with a partner in retirement, consider how they'd support themselves if you're gone. If you're receiving a pension, would any of that benefit transfer to your partner at your death? If not, life insurance may be one way to allow your partner to keep living the same lifestyle that they have while you're alive.
Am I financially equipped to leave a legacy?
Depending on your financial situation, you may be living from a stricter budget or fixed income in retirement. In this case, you may not have considered how you'll leave a financial legacy for children, grandchildren, or other loved ones. A life insurance policy can not only cover the cost of your burial and funeral but can also be used to leave a meaningful financial gift to those you love.
Which type of life insurance is best for retirees?
Depending on how much money you'll need and for what purpose, there are several types of life insurance to consider.
A final expense policy, sometimes called burial insurance, is a smaller, permanent life insurance policy that covers the cost of your funeral and burial. This policy is popular among retirees since it's often guaranteed issue, meaning your health and lifestyle are not a consideration. Applicants will qualify for the policy as long as they meet the age requirements.
Veterans life insurance is specifically intended to support veterans and their loved ones. While some government policies are offered to servicemembers, private life insurance can help supplement that coverage. If you served in the military when you were younger, term and whole life insurance policies may be available with affordable premiums.
Whole life insurance is a permanent life insurance option that has the ability to accrue cash value alongside leaving a death benefit for your loved ones. This type of policy tends to be more expensive as you get older, so it's worth getting a quote and factoring it into your retirement budget before you commit.
The bottom line
Whether you'll need life insurance in retirement depends on your unique financial picture. If you are debt-free with a significant amount of assets and your loved ones can cover burial expenses, you may not have a need. But if you need financial support in any of those areas, life insurance could help bridge the gap.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
Aflac life plans - 68000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. 65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.
Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
In AR, DE, ID, OK and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Aflac Final Expense policies are not available in New York.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.
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SOURCE: Aflac