Life insurance can be one of those things that is in our life for so long we start to think of it like a family heirloom – just hanging around collecting dust right now, but it could turn into a pot of money in a time of need. Then, when it’s time to let a policy lapse, we worry and fret over its ending. We wonder whether we should hang on to it for a while longer for that sense of security it can provide.
For many middle-income Americans, however, if you’ve adequately prepared for retirement, you likely don’t need life insurance in retirement. That was part of preparing for retirement! Of course, there are situations where life insurance in retirement years can make sense, such as a surviving spouse needs help paying off a mortgage to stay in the home or needs to replace a pension that terminates at the death of the owner. However, quite often we come across situations where there is no financial need for life insurance, but letting go of group life insurance at retirement or allowing a term policy that is coming out of its fixed premium period to expire, brings great discomfort.
In these cases, think of it like this: When you were young you got life insurance to help raise and educate the children, pay off the house and shore up retirement savings should one of you die prematurely. By the time you get into retirement, the kids are on their own (hopefully!), the mortgage is paid off and you’ve done all your retirement savings. It’s time to let go.
- Written by Juli Erhart-Graves, CFP® Worley Erhart-Graves Financial Advisors