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What happens to your life insurance when you retire?



When you retire, you have the opportunity to continue paying for the life insurance you had while you worked or bought your own insurance that is not linked to your employer at all. For most people, the type of group life insurance (offered at work) that costs almost nothing while you work becomes very expensive to continue after you retire. Insurance companies have different policies to offer you that you should explore years before you set the clock for your last day of work. <! – ->

You should know about these things that can affect your life as a policyholder. It is always worth remembering that you really only get one chance to plan your retirement. You should be able to enjoy your freedom when you stop working or running your business. One way to do this is to maximize the benefits you can get from the life insurance you own during your retired years.

Life insurance, although not required, is one of the best and most stable assets you can use to store cash before and during your retirement. Aside from the fact that it provides your family with security when you are no longer nearby, you can also enjoy the benefits of its cash value while you live.

Life insurance companies have become much more creative now and are creating insurance policies that offer basic death protection with the ability to provide competitive returns on your cash with outstanding stability. You now have options more than just paying big premiums to insure your death benefit. If you are still hesitant and want to learn more about why you might consider taking out life insurance when you retire, here are some things to keep in mind. <! – ->

How Long Should You Have Life Insurance?

Life insurance, as the name implies, ensures that you and your family are financially secure when you are no longer here. The most popular life insurance policies sold today are life insurance policies. You buy a futures policy for a predetermined period, usually 10, 20 or 30 years. After the period has elapsed, the policy ends. It can be good for you when you are younger and have a really tight budget, as most term insurance policies are quite cheap.

But if you are retired, you probably want some form of life insurance coverage that will be around until you die, not just for the next 10 or 20 years. So what we have found to be the best option for most retirees is to look at permanent life insurance. There are actually two main types of permanent insurance – full life insurance and universal life insurance.

If you want to read more about the three types of life insurance, read this article. <! – ->

The key to buying permanent life insurance (let's talk specifically about participating in full life insurance) is to get it long before you retire. If you buy a whole life insurance when you are younger, you will find that it is much cheaper and if the insurance is properly designed, the death benefit will grow over time. This is why it is best to have one when you plan to retire at age 65 or younger.

Starting a policy when you are young and starting one when you are old will change what you can afford. When you are young, you pay less premiums than when you are old for the exact same death benefit. Take a look at this example from our entire life insurance calculator …

Brad is 30 years old and he is married to Jenny. They just had their first child and that makes Brad think about his life insurance. Right now, all he has is a death benefit that is 2x his annual salary at work, which is about $ 160,000 in total death benefit. The policy costs him about $ 12 / month. He thinks he would like to add $ 500,000 to his entire life insurance policy. When he comes to our calculator this is what he enters:

 the whole life insurance calculator enters your details


Here is an estimate of what Brad will pay he buys the policy now 30 years old:

  results for the whole life calculator for 30-year-old man

If Brad on the other hand decides to wait and instead wants to buy the same whole life insurance when he is 55, this will be the result (approximately):

The cost of waiting here means that he will pay almost 3 times as much in annual premium for the same death benefit, he will have much less cash value to add extra liquidity to his pension and his death benefit at 65 (retirement age ) will be about $ 300,000 less than if he started his insurance now at 30. Waiting is expensive and can be detrimental to your ability to afford life insurance in retirement. <! – ->

Do I need coverage if I have a pension?

Another thing to keep in mind is to have insurance when you are already retired. Some believe that their pension is the most important pension benefit. While this is not a bad thing, pensions may not be enough to support you during your retirement.

What happens if you retire at age 65 and live to be 95 years old? You still have to support yourself for 30 years if that is the case. Your pension can certainly provide a good, stable income, but it is probably not enough to be able to afford everything you want to enjoy your retired years. You still need an extra resource (more income) to help you create a solid retirement plan. Life insurance with cash value can add to the extra pension income that allows you to enjoy yourself.

The good thing about having life insurance is that it acts as an extra source of money when you retire. You may have plans to travel, build a retirement or start a small business. The accumulation of cash value throughout your life insurance or indexed universal life insurance is a clear source of available capital when you are ready to make your move. More often than not, pensions are only as good as a monthly allowance. You will not get enough of it if you still want to do other things when you retire.

Is life insurance worth getting if you are 65 or older?

It's better late than never. Whether you are 65 or older, it is still worth it to get a life insurance policy. As long as you can pay the premiums, life insurance is worth it. The best advice we can offer her is to adjust your expectations a bit. You do not intend to purchase a $ 500,000 life policy when you are 65 years old for $ 100 / month. <! – ->

But you might be able to buy a full $ 20,000 life policy for $ 100 / month when you're 65 years old. Sure, it will not give you any additional benefits but it will ensure that there is money to take care of your funeral expenses and maybe to settle some small debts that can help your spouse. Just make sure you understand the terms of the policy you are buying and that you can comfortably afford the premiums in the future.

The Wrap Up

The best time to get life insurance is now, whether you are younger or older. As you age, insurance challenges and policy costs make it harder to find a policy that fits your budget. If you have the opportunity to buy insurance now that can provide a pleasant death benefit, decent cash value accumulation and an affordable premium when you retire, do not wait. As long as you are close, you will continue to enjoy the benefits that your insurance provides during your years of retirement.


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