Do retirees need life insurance?

People who have been paying life insurance premiums for many years are reluctant to stop.  But often the need for a death benefit is gone once the kids are grown and there is enough money for the couple to live comfortably for the rest of their lives.

Keep in mind that the reason for purchasing life insurance in the first place is to protect the bread-winner and make it possible for the surviving spouse to put the kids through college. Since these factors are no longer in play once they retire, we have to ask out clients to reconsider whether the additional expense is still warranted.  This is especially true if the insurance is a term policy which often gets more expensive a people age.

Canceling one’s coverage shouldn’t be a casual decision. In some instances, clients have already paid a great deal of money into these policies, and given their advanced years will never be able to obtain another one for the same rate. So before dropping the coverage, people should think long and hard about any possible implications.

In any case, if you have life insurance policies it’s wise to review them on a regular basis, make sure that the beneficiaries are the ones you want to receive the proceeds and check the tax implications of policies outside of irrevocable life insurance trusts.

If you have questions, ask your financial advisor.

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