Why You May Want Life Insurance Even if You’re Retired


For many people, the idea that you need to have life insurance when you are retired is a bit of a stretch. After all, when you’re retired no one is dependent upon your income, and you may be effectively self-insured as a result of having a large investment portfolio.

But while that may be true, protecting the value of that investment portfolio may be a compelling reason to keep life insurance – in addition to some other reasons you may not have thought much about.

To cover burial and medical expenses

Burial expenses are the most basic reason why anyone has life insurance. But medical expenses, particularly those that precede death, can be overwhelming. No matter how much health insurance you have, there are always expenses that are subject to co-payments and deductibles, or are not covered at all. This is especially true with end-of-life medical treatments that are often experimental and not covered by insurance.

These expenses can leave your spouse with tens of thousands of dollars in unpaid bills. While those bills might be paid out of your investment assets, the result will be a smaller investment base at a time when your loss will create other financial obligations. Having adequate life insurance is a way of making sure that those expenses won’t disturb the assets that your spouse will be living on for the rest of his or her life.

To cover lost income for your spouse

Even though you may no longer work for a living, you’re still providing income to the household through your Social Security benefits in any pension income you may have. Either may be reduced or eliminated in the event of your death. That will create the need for an additional income stream for your spouse.

Typically this income stream will be provided by the income earned on additional investment assets. Life insurance will provide that capital that will result in the additional income to cover your lost retirement income.

To prevent the early draw down of retirement assets

Though we often think of our deaths as creating the need for money to pay for final expenses and additional income to our survivors, it can also trigger the onset of other expenses that we don’t normally think of.

Once you die, you will no longer be around to maintain your home or cars, to handle financial responsibilities, to cook, clean, or handle any of the endless chores that maintaining a household requires. Your passing may create the need to hire outsiders to handle some of those responsibilities, including:

  • A housekeeper
  • An accountant or financial advisor
  • A landscaper
  • A handyman
  • Greater reliance on a mechanic

This is just a short list of examples of services that may be needed in event of your death. Each will create new expense categories in your spouses budget. Having several of these can result in accelerated drawdown of the retirement assets available for your spouse in the event of your death. A generous life insurance policy can go a long way toward offsetting these expenses.

If your retirement assets are inadequate

This situation creates the greatest need for life insurance in retirement. If it is difficult for you and your spouse to survive while you are alive, it will be substantially more difficult for your spouse to go it alone after your death.

Having a large amount of life insurance will be a way of providing necessary retirement assets for your spouse after you’re gone. Though you will not enjoy the benefit, it could mean the difference between a reasonably comfortable retirement and very difficult living conditions for your spouse in the event of your death.

To leave money to your children

Even if you have sufficient financial resources to provide for your spouses survival, you may still want to have additional assets to leave something to your children.

Consider that even if you die in retirement, your spouse could live another 20 years or more, particularly if he or she is significantly younger than you are. Even a large amount of retirement assets could be depleted if your spouse lives that long. And with inflation causing an ever rising cost of living, that is more than a remote possibility.

If that is a concern, you could have life insurance policies set up specifically to transfer money to your children upon your death. Your spouse would continue to live on your joint retirement assets, but you’ll still have left a financial provision for your children.

Life insurance for seniors can be affordable, the peace of mind it provides is priceless.