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Life insurance for retirees

You might still need coverage, even after you stop working full-time.

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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.

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Is life insurance still necessary if I retire?

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:

  • You’re still paying off debt. If you’re still paying off your mortgage, a business loan or any other type of debt, you won’t want that debt to burden your loved ones if you die.
  • You have dependent children. A child with special care needs or a child who is attending university may still need financial support after you die.
  • Your spouse isn’t self-sufficient. If your spouse relies on you for financial support, or stands to lose a substantial portion of their retirement income when you die, life insurance can be beneficial.
  • You want to leave something behind. Do you want to help your loved ones cover the cost of your funeral, or simply ensure they receive a little financial support when you pass away? Life insurance could be the answer. You can even nominate a favorite charity as a beneficiary.
  • You want to cover your funeral costs. Funerals can run into the thousands of dollars. If you’d like to pay for your own funeral and burial — as well as any end-of-life expenses, like unpaid medical bills — a life insurance policy can ease that burden on your family.

How much does life insurance cost when you retire?

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.

Should I change my life insurance when I retire?

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.

Using life insurance to plan for retirement

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.

Tax and the cash value

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.

Compare life insurance companiess

Name Product Issue age Minimum Coverage Maximum Coverage Medical Exam Required
Sproutt
18 - 100 years old
$50,000
$3,000,000
No
This life insurance broker combines technology and the human touch to match you with a policy tailored to your needs.
Policygenius
18 - 85 years old
$10,000
$10,000,000+
Depends on provider and policy
Compare affordable quotes from 12+ A-rated life insurance companies side-by-side.
Fabric
25 - 60 years old
$100,000
$5,000,000
Depends on policy
Get affordable term life insurance with accelerated underwriting or no-exam coverage up to $1,000,000. Available in all states except CA, NY and MT.
LadderLife™ Life Insurance
20 - 60 years old
$100,000
$8,000,000
No
Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.
Everyday Life
20 - 75 years old
$100,000
$10,000,000
No
Build a customized laddering strategy to target specific financial responsibilities and save on term life.
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What type of life insurance is right for me?

If you decide that life insurance after retirement is the right option for you, these policies might be the right fit:

  • Final expense insurance. As you pay off your debts and your children become independent, you may end up only needing insurance that covers end of life expenses — such as medical and funeral costs.
  • Simplified issue life insurance. This policy skips the medical exam but requires you to fill out a health questionnaire. If you’re approved, your coverage could go into effect within days.

Other policy features to look for

Along with comparing policies, consider these features:

  • Cost-of-living rider. Some policies will increase how much you’re insured for each year so it keeps pace with inflation. This is an important feature because it guarantees that the level of coverage you choose increases in line with the rising cost of living.
  • Critical illness benefit rider. This add-on pays out a lump sum benefit if you suffer a covered critical illness, such as a stroke.
  • Long-term-care rider. This rider allows you to pull money from your death benefit to pay for a nursing home or other care expenses if you’re diagnosed as chronically ill.
  • Guaranteed insurability rider. Policies with this feature allow you to adjust coverage without having to take a medical exam.

How to choose the right coverage

When you’re shopping around for a policy, keep these tips in mind:

  • Compare your options. Any life insurance policy you choose must be affordable throughout retirement. Make sure you can comfortably pay your premiums and compare quotes from multiple providers to get the best value for your money.
  • Look beyond the cost. Cost will always be an important consideration when buying insurance, but it shouldn’t be the only one. Remember to compare life insurance quotes along with the features and benefits each policy offers. This will help you find the best value for money.
  • Get expert advice. An experienced insurance broker can help you assess your coverage needs, compare a variety of policy options and find the policy that’s right for you.

Bottom line

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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