Kishore is 57 years old, his kids are grown and out of the house, and he doesn’t really feel like he needs life insurance he once carried. He currently has Rs 100,00000 worth of life insurance, but once the kids moved out and he fully funded his retirement income strategy, the half million seems excessive. It’s just he and his wife now, and they have plenty of money set aside for retirement. Should he keep it just in case? Is life insurance needed in retirement? He asked his friend Mr. Piyush the Planner to help him. Let’s have a look what Piyush replied to it.
While many retirees choose to stop paying their life insurance premiums when they no longer have young families to take care of, there are a few reasons you may still want to keep your policy. Here are some different points to consider that can help you determine if you still need life insurance in retirement.
Life insurance is designed to help protect your spouse and children from poverty in the case of your untimely death. But if your children are grown and are on their own, and you have sufficient financial resources to cover you and your spouse’s retirement costs, then there is little need to continue to have life insurance. You can go for such term plans which not only cover you but your wife as well even if she is a housewife. She can take care of the children maintain their lifestyle even in
But, if you had a child late in life or have a relative with special needs who is dependent on you for income, it makes sense to keep paying the premiums on your policy.
You also need to make sure your spouse’s retirement income will not take a significant hit when you die. Check out the conditions of your pension to see if they stop paying when you die, and factor in your lost Social Security income too. If you find that your spouse will lose a significant portion of income upon your death, you may want to keep the policy to help make up the difference.
Will you need to take another job in retirement to earn income? Since life insurance helps replace lost income for your family when you die, you may want to keep your policy if your spouse or other family members are relying on that income. If, however, you have very little income from your retirement job, then there’s probably no need to continue with the policy.
Life insurance can also be a handy tax-planning tool. If, for example, you own a business that you want to keep in the family and you don’t have enough liquid assets to take care of the taxes, you can sometimes use a life insurance policy to help your heirs when you die.
Don’t be so excited to get rid of life insurance that you ignore the changes in your need. Take hold of some permanent coverage and be glad that you’ve been there to celebrate your family’s monumental moments.