Retirement may feel like the end of your financial responsibilities, but that’s not exactly the case. Even if you don’t have a dependent or debt to worry about, life insurance can still be a valuable and cost-effective way to provide security for your future.

Whether protecting an estate or providing resources for final expenses, life insurance can provide you with peace of mind during your golden years. In this article, we’ll discuss why having life insurance after retirement should not be overlooked and how it can help secure your family’s future.

Understanding life insurance

Life insurance is a contract between the insurance company and the policyholder. The policyholder’s responsibility is to pay the life insurance premium each month. The insurance company’s end of the deal is to pay out a death benefit to the insured’s designated beneficiary when the policyholder dies.

There are two types of life insurance: Permanent life and term life. Here’s a breakdown of both:

Term life insurance: Term life insurance is temporary insurance taken out for a specific period (term), which can span anywhere between 5 to 20 years. It expires at the end of this term and accumulates no cash value while the policy is active.

Permanent life insurance: Whole life, standard universal life, variable universal life, and indexed universal life are all permanent life insurance policies. Permanent life insurance doesn’t expire, and a portion of each premium payment is invested to build cash value, which you can borrow against in times of financial need.

Assessing your life insurance needs

The purpose of having life insurance doesn’t change when you retire. A life insurance death benefit protects your loved ones from the financial obligations you have accumulated, like medical bills or credit card debt. It also helps to replace any income that you’re currently bringing in. Income in retirement might be fixed, but it’s still of value to anyone in your household who’s relying on it.

To calculate your life insurance needs, add the total amount of any outstanding debt to the amount of income you’d bring in for the next ten to fifteen years. Look for a policy that offers a death benefit that will cover your debt and replace your income. Talk to your insurance agent about whether a term life policy or permanent life insurance best suits your needs.

Additional options after retirement


The early years of retirement or the last few years preceding retirement are a good time to invest in annuities. An annuity is a type of investment that provides a stream of income for a certain period of time or the rest of your life. Essentially, you invest a lump sum of money in your life insurance company, and they pay it back to you with interest over time.

There are also variable annuities that are tied to stock market performance, which are more volatile, but the upside can be high.

Long-term care insurance

Another investment to consider is long-term care insurance. This insurance policy is specifically earmarked for paying for nursing homes or rehab facilities if you need these services. Long-term care insurance is not life insurance, but it can ease the burden on your loved ones if they can no longer take care of you at home.

The Bottom Line

Life insurance is still a great benefit to have after you retire. If you have an employer-sponsored plan, it will terminate, so you’ll need to pay life insurance premiums on your own. You can choose between permanent life insurance, which builds cash value, or term life insurance which expires when the term ends. You might also want to look into annuities and long-term care insurance. Ultimately, it’s always a good idea to research your options and reach out to a financial advisor to make the best decision for your financial needs.


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