Should Retirees Carry Life Insurance?

Here's a question that's a bit perplexing -- at least for many: should retirees carry life insurance? Here's Marketwatch's take on the issue:

That is the question many retirees face. Should they keep their life insurance policy or not? Unfortunately, experts say there are no easy answers.

"I'm afraid that the only meaningful answer is: 'It depends,'" says John Olsen, co-author of "The Annuity Advisor" and principal of Olsen Financial Group in Kirkwood, Mo. "Retirees are individuals, having individual situations and goals. Some retirees need life insurance. Others won't need any life insurance. And some may not need the life insurance they already own."

Well, that clears things up.

Seriously, many of the answers to financial questions are "it depends". But at least the article tries to give you some guidance. Here it is:

You may need life insurance if:

• You have a mortgage or large debt to pay off.
• You have survivors -- a spouse, children, grandchildren -- or children or grandchildren with special needs.
• You will face a significant state or federal death tax when you die or your surviving spouse dies.
• You anticipate needing a home health aide, an assisted-living facility or a nursing home and you don't have the funds to pay for such care.
• You want to help a business partner buy a retiree out.

As for me, my plan is to build up my finances over the next 15 years or so (while my life insurance is in effect), and eventually get to the point where I won't need it for my survivors (my kids will have been through college and my wife will have enough to live on). I may have issues regarding estate taxes at some point, but those are unlikely as I plan to keep my assets below that level (through gifts to family and charities).

Comments

[EMF]

Some of the bulleted points about retirees needing life insurance make no sense to me. How's life insurance going to help with health care expenses?

Why does a retiree have a business partner who's buying another retiree out? Contradicts the definition of "retired".

If you're single, there's no need to have life insurance to cover a mortgage -- the value of the property should cover that when your estate is settled. Are people who buy reverse mortgages required to buy life insurance?

In the end, the need for life insurance derives only from whether or not you have dependents to provide for. And that is true whether retired or not. I'm not retired and have at least a decade to go, and being without dependents would not have life insurance except for the fact that my employer provides it -- over my objections. I'd rather they didn't since I have to pay tax on the imputed premiums, but that's another topic.