Should You Keep Your Life Insurance Policy If You’ve Recently Retired?
You’ve put in the work and now it’s finally here. No more heading into the office every day, the golden days of retirement are here at last.
However, while you are in the midst of planning your work free days, you may want to consider your life insurance policy. After all, is it really necessary to retain a life insurance policy after retirement? Although many people choose to drop their policies, you may not want to drop your coverage just yet.
While life insurance may not be necessary for everyone after retirement, there are still a few reasons why you may want to keep your policy, or at the very least, revise it.
Questions to Consider
Not sure if this would be applicable to you? Begin by answering the following:
Do you still have a mortgage?
If you still possess significant financial obligations such as a mortgage or other outstanding loans you may want to consider holding onto your policy, at least until these obligations are paid off. Even though you have entered retirement, if you still have an outstanding mortgage your family could still be left to foot the bill. While the majority of your mortgage may be paid off, it is in your best interest to retain your policy if your family is unable to bear the burden of these costs.
Are your loved ones self-sufficient?
Once you’ve entered retirement, you’re not likely to be supporting little ones at home. However, while you may not be providing as much assistance as a young parent, that doesn’t necessarily mean that are not providing some assistance. For example, it is common for many baby boomers to be financially supporting spouses or even grandchildren well into retirement. If you are someone that is providing financial support to a loved one and would like to continue doing so, it may be in your best interest to keep your life insurance policy.
Do you own business or large estate?
Do you run a successful business or are the owner of a large estate? If so, these assets may be subject to tax after your passing. Depending upon the value of an estate or businesses, these taxes could end up being extremely high, which can be problematic for loved ones who can sometimes be held responsible for covering these expenses. Hefty state taxes along with the possibility of liquidation are potential problems that can be faced when an owner dies. If you are in a position in which you are the owner of considerable assets and investments that could be on the line, opting to keep your life insurance coverage during retirement could prove to be a smart move.
So, should all retirees keep their coverage? Absolutely not! However, dropping coverage without a second thought once you’ve entered retirement isn’t exactly a wise move either. While there are plenty of reasons to drop your policy there are also a few reasons why you would want to keep your policy, or at the very least revise it. No matter which route you decide to take, it’s important that you’re able to make a clear and informative decision about your coverage.
We want to know what you think! What are your thoughts on keeping life insurance coverage during retirement?
Featured image via FolioInvesting
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