Unlike health and car insurance, many retirees opt to drop their life insurance policies when they drop their jobs. The logic being that if someone is in a position to retire, they are generally financially stable enough that their death will not leave a spouse or other loved one struggling to make ends meet. While you don’t need life insurance under these circumstances, there are a few reasons why you might want to hold onto your policy.
Whether or not your children are grown—hey, some of us get a later start than others—it is human nature to want the best for your kids. In today’s world, that often translates to monetary support. Your life insurance policy can provide your children extra financial security for years to come. And if you have younger kids at home, a life insurance policy can ensure they are able to attend college or pursue other professional opportunities.
The Greater Good
If your family is already protected in the event of your passing, you may want your life insurance policy to be paid out to an organization or charity whose mission you support. Naming a charity as your primary beneficiary is a feel-good way to leave behind a lasting legacy.
Individuals and families with large estates must develop a financial plan that enables them to afford estate taxes into the future. A permanent or universal life insurance policy promises payout no matter how long you live. The money from this type of policy can provide your heirs with the necessary funds to maintain the family estate without having to tap into their personal assets.
Business owners and partners may want to consider keeping their life insurance policies after retirement as private company interests are illiquid assets subject to both taxation and market flux. As the value of these high-risk securities grows, so too does tax liability. This is especially true during times of economic instability. In these cases, a life insurance policy can ensure that your business won’t have to liquidate corporate assets after you’ve gone.
There is no one-size-fits-all approach to retirement. The same is true of life insurance. Regardless of your financial situation, it is a good idea to speak with an insurance or financial professional to determine which life insurance options make the most sense for you, your family and your assets.