Should You Purchase Life Insurance If You’re Already Retired?

For many years in the past, it was thought that the only people who needed life insurance were those who had someone depending on them for financial support – and that meant that in most cases, if you were retired and were no longer earning an income, that you no longer needed life insurance. However, the truth is that today, that is simply not the case at all.

In fact, no matter what age you are and what stage of life you are in, it is essential to be financially prepared – and one of the best ways to do so is to have a good solid life insurance policy in place.

Why Retirees Still Need Life Insurance Coverage

In the past, most retirees where likely to have their home mortgage paid off. They were also referred to as “empty nesters,” with their children grown and out of the house. Typically, these retirees were able to rely on an ongoing retirement pension income from an employer that would last them throughout the remainder of their life – regardless of how long that was. That incoming cash flow, coupled with a reliable income from Social Security, was more than enough to get them by.

life insurance for retireesBut today things are quite different. Many retirees are still making monthly mortgage payments – sometimes on more than one home. In addition, it is not uncommon at all these days for a grown child, as well as grandchildren, to be living under the same roof with a retiree.

The reliable lifetime pension income source has also all but disappeared from most companies, now being replaced with 401(k) plans that leave the responsibility of having enough retirement income up to the employee – not the employer. And unfortunately, Social Security has become somewhat shaky. It is estimated that today, the retirement income from Social Security only replaces about 40 percent of one’s pre-retirement wages.

With all of this in mind, what would happen financially to the spouse or other loved ones of a retiree should he or she pass away?

Without life insurance, it is oftentimes necessary for loved ones to quickly sell off investments and other assets – typically at far below their market value – just to pay off debt, pay estate tax liability, or meet ongoing living expenses.

Top Reasons for Buying or Keeping Coverage

As a retiree, there are actually many reasons for either purchasing life insurance or for keeping the coverage that you already have. These can include:

  • Income – For those who are married or have a partner, in many cases, the income that you have from various retirement sources will stop at your death. This could leave a spouse or partner immediately without a way to pay for any ongoing living expenses going forward. The proceeds from a life insurance policy, however, could be used to replace this needed income. Funds from a policy could either be used outright, or placed into an income annuity so that income may be generated on a steady and ongoing basis.
  • Estate Taxes – Many people may not realize that you don’t have to be ultra wealthy to owe estate tax – and if you do owe these taxes, they can take a sizeable chunk out of the funds that beneficiaries were counting on for other financial needs. Having a life insurance strategy in place for paying estate taxes can be a smart way to reduce estate tax liability, while at the same time keeping other assets in place where they belong.
  • Business Succession – Life insurance can also be used as a vehicle for business succession. The funds from a policy could be used to provide liquidity to the company while a replacement is being sought or other arrangements are being made for the business’s continuation.
  • Charitable Contributions – Certainly, another reason for retirees to own life insurance is for the charitable contributions that this financial tool can offer. For the price of a small premium, the amount of a policy’s death benefit can be donated – tax free – to a charitable organization. An additional benefit to the policy owner is that premiums can be tax deductible.

Taking the Next Step

In obtaining the financial protection that you need, the first place to begin is with comparing life insurance policy quotes from top rated carriers. This way you can determine which plan will work best for your specific needs, goals, and budget.

At we help you to find your ideal life insurance planning tool. By using the form on this page, you can get the process started. In addition, if you should have any additional questions or concerns about life insurance, comparing quotes, or how to qualify for coverage, please feel free to give us a call, toll-free, at 888-229-7522 and we will be happy to help in getting you the information that you need.

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