Retirement and Life Insurance

Do you still need life insurance during retirement?  This is a question that many people face when retiring, but I think the real question should be “If I died, would my death create a financial hardship?” If so then I think there is an obvious answer of—yes!

Now before you start thinking that I am just going to say that everyone needs life insurance let me say that I do not believe that everyone needs life insurance.  Example:  single men (non-business owner) with assets double his liabilities and no family members does not have a need for life insurance.  He may want life insurance, but there is not a striving need for it.

How much life insurance should I buy?

When you are retiring consider how much life insurance you have in force, your assets, the amount of money you need each month with inflation, and if something should happen to either of the spouses what would that do to the monthly income. There are a lot of different theories to how much term or universal life insurance you should buy after you retire.  The important thing is making sure you have life insurance for the length of time a financial hardship would occur as a result of your death. Example:

• Husband and Wife -65
• $3,500 monthly income through Pension and Social Security
• Benefits paid on Husband (after death benefits cease)
• No current life insurance in place

In this situation the wife’s income ceases besides social security upon her husband’s death.  She would need a life policy on her husband to insure her financial security upon his death.  If an immediate annuity of $350,000 face amount would provide $3,000 in monthly benefits for her lifetime, they may want to consider a $350,000 universal or term life policy on the husband.

How long should the policy cover me?

The key thing to consider when purchasing a life policy is making sure the coverage is in place for the amount of time you need it. With Universal and Whole life insurance the policy lasts the remainder of your life, but with term life insurance only a specific amount of time is covered.  When purchasing term life insurance make sure you cover yourself for an ample amount of time, because the last thing you want is to have a policy that expires and then you are unable to purchase another policy due to health reasons.

Article added 08/16/2011 by Ryan Eaton
Senior Division Manager: Morgan White Group
ryan.eaton@morganwhite.com

For more info about Term Life Insurance, please feel free to contact me.
Submit basic questions to: seniordivision@morganwhite.com.