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Life insurance is primarily used as a Risk cover or financial security in case life Assured dies prematurely and is not able to financially look after his or her dependents. The benefits are awarded to the nominees, such as dependent children in case the Life Assured or bread winner dies within the Policy Term period. However, when one retires, children grow up and earn their own living. It does not require aged people to have life cover as they are already in their twilight years.
Dependents are no longer their kids but they themselves. Does life cover really matter to them and their safety? -- Perhaps not. In short, life insurance would have no meaning post retirement age. However, you may consider an insurance policy which has a strong retirement planning. A benefit that would give you Annuity or Pension to maintain your standard of living is far more useful instead. Take a look at some angles of insurance policy and whether it really makes sense to own such a policy when you retire.
Life insurance matters most when one has dependents. Post retirement, the dependent can be your spouse who requires to be maintained in case you die. In such cases, life insurance policy can be of some use. In most cases, aged couples buy a joint annuity plan where regular amount is paid to the couple after each month. On death of the spouse, the partner gets a lump sum death benefit.
The retirement planning scheme coined by the insurance providers often allow immediate payment of the pension. The Annuitant gets the money as long as he survives. If he dies, his spouse gets the equal amount of annuity. If you have net worth and future pension privileges that are good enough to sustain your partner, life insurance is not necessarily needed.
If you already own a whole-life plan and retired after years of service, you would definitely not like to sell off your whole-life plan. A life insurance policy of this type which has been bought years back can reap fruit for your spouse or children in case you die anytime after retirement. You can in the meantime, select another retirement plan with immediate annuity or pension scheme as a part of retirement planning.
There are many Deferred Annuity plan which seek Premium from policyholders throughout the policy term. At retirement age, the amount is paid either as lump sum amount or in regular intervals. Although tax-free, you may not get a profitable income from deferred annuity plans.
In other words, though these plans act as life insurance plans with retirement planning and life cover, you would not get enough profit to sustain yourself at your expected standard of living through such plans.
Health insurance policies or retirement policies with health cover have a lot of benefit than life life insurance policy. These include hospitalization, domiciliary expenses, and expenses for post operative nursing. When you suffer from critical illnesses, health insurance would help you meet the expenses incurred in the treatment.
In fact, many sons and daughters buy health insurance for their parents or urge them to get one for themselves, rather than put their money on life insurance policy.
All in all, majority of the insurance policy experts have opined that life insurance does not make sense when you retire as the benefit would hardly be granted to you. It would go the nominee who may not depend on your finances. A better way would be to go for retirement plans that offer financial assistance to the retired couples – insuring them for life.