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Being free from the financial commitments you had when you were younger may lead you to think that life insurance coverage is no longer necessary. However, you might be surprised to learn that life insurance for retirees can still offer a long list of important benefits. And it’s likely well worth considering your coverage needs during retirement.
Unfortunately, there’s no easy answer to this question as it really depends on your personal circumstances and needs.
Consider the financial impact your death, serious illness or injury could have on your loved ones. If your kids are self-sufficient, your spouse has an adequate retirement income and you don’t have any debt, you may decide that you don’t need life insurance beyond end-of-life expenses.
However, there are plenty of situations when life insurance after retirement could be a good idea:
Life insurance companies reserve their best rates for young, healthy applicants — so you’ll likely be charged higher rates as a senior. The tables below show how much you can expect to pay for coverage before and after you retire.
Age | $250,000 coverage | $500,000 coverage | $1,000,000 coverage |
---|---|---|---|
56 | $70.36 | $123.83 | $233.20 |
57 | $77.94 | $137.17 | $259.49 |
58 | $86.90 | $152.94 | $290.03 |
59 | $97.03 | $170.09 | $322.89 |
60 | $108.81 | $190.23 | $360.79 |
61 | $119.98 | $212.94 | $408.76 |
62 | $133.52 | $240.95 | $461.84 |
63 | $152.60 | $280.71 | $534.03 |
64 | $169.85 | $316.71 | $602.00 |
65 | $191.86 | $360.60 | $683.69 |
Age | $250,000 coverage | $500,000 coverage | $1,000,000 coverage |
---|---|---|---|
66 | $228.94 | $434.37 | $819.94 |
67 | $261.91 | $493.17 | $943.94 |
68 | $297.33 | $554.13 | $1,069.51 |
69 | $325.60 | $639.75 | $1,224.32 |
70 | $369.08 | $725.00 | $1,395.82 |
Rates are provided by Quotacy and valid as of May 2018 in all states except New York and Montana.
Whether or not to review your retired life insurance depends on your overall financial health, current policy and personal needs. Your policy may have provided perfect coverage when you were working full time, paying off a mortgage and supporting a young family, but that same level may be more than you need once you’re retired.
Changing your policy isn’t always necessary when you retire, but it’s worth determining if the level of coverage you have is still right for you. Ask your financial planner or insurance broker to help assess your financial and personal situation to get a better idea of what needs changed, if anything.
You can also plan for retirement with the help of a permanent policy. When you take out a whole, variable or universal life insurance policy, a portion of your premium goes into a separate account that becomes a cash asset over time.
Once you’ve built up enough cash value, you can take out tax-free loans against your policy – or withdraw those funds. As a retiree, you could contribute to your cash value while you’re still working, and then collect that cash upon your retirement.
That’s how life insurance works as part of a retirement plan. Just keep in mind that any loans or withdrawals will be deducted from the death benefit, which means your beneficiaries will receive less money when you die.
Withdrawing the cash value of your policy has some tax advantages. Generally, cash-value withdrawals aren’t taxable up to your policy basis. Your basis is the amount of premiums you’ve paid, minus any dividends you’ve earned or withdrawals you’ve made.
If you exceed that basis, you’ll be taxed.
If you decide that life insurance after retirement is the right option for you, these policies might be the right fit:
Along with comparing policies, consider these features:
When you’re shopping around for a policy, keep these tips in mind:
Retiring doesn’t mean you have to — or should — abandon your life insurance completely. But you should evaluate what you need and what your loved ones would need upon your passing.
To find the policy that best fits the next chapter of your life, check out our guide to life insurance and compare life insurance companies.
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