Categorized | Life Insurance

Is Life Insurance Needed in Retirement?

Compare Retirement Insurance Plans

Retirement is a time when you want to shrug off from all responsibilities and be carefree. A few people who have accumulated enough savings may have the luxury of opting for an early retirement, while a few retirees are forced to work part time. Most retirees face the dilemma of whether they should continue paying the Premium for their life insurance plan or opt out of it. The answer is not definite and it depends on a multitude of factors discussed below.

1)   Are There Dependants?

A large number of retirees continue to have financial responsibilities even after they retire. They either work part time to fulfill these or contribute their retirement income to the family funds. In cases, where there is a late marriage and the children are still pursuing education, it makes sense to continue with your life insurance policy. Nowadays, we get to see such a scenario quite often. People marry late and as a result their children are much younger when it is time for them to retire. The time gap between parents taking retirement and the kids becoming financial dependent is also widening as there is growing trend among young generation to pursue education until they reach their late twenties.

There might also be special cases, where a child would have lost his job and in such a scenario it makes sense to continue with the insurance policy.

2)   How Much do You Hold in Retirement Savings and What is Your Retirement Income?

If you are retired, and you do not have any Dependants apart from your spouse, then whether or not you should continue holding an insurance policy would depend on the quantum of your retirement savings and retirement income. Just think of a scenario where your spouse outlives you for a considerable time, say 20-30 years, and calculate if your retirement savings are enough, so that she can continue to maintain the same quality of life as she is maintaining today. If you think there could be a gap, it makes sense for you to hang on to your insurance policy. The sum that your spouse would receive will help in funding the gap.

3)   Would You Like to Spare Money for Charity or Inheritance?

If you have enough savings to meet all your retirement expenses and you want to spend it the way you want without having a guilt of not saving enough for your heirs, it makes sense for you to hold on to your policy. The sum Assured amount can serve as an inheritance for your children.

If your children are well off and you do not feel the need to have a life insurance for their protection, but you may have a relative who can benefit or if you want to leave money behind for charity, you may decide to continue paying the premium on your policy.