Retirement and Life Insurance: Do You Still Need It?
5 Questions to Help You Decide

Posted: February 01, 2024 by John Welcom

Retirement and Life Insurance: Do You Still Need It?

Most of us purchase life insurance because we want to ensure that our loved ones have some measure of financial protection in the event of our sudden passing. We want to provide them with an umbrella over their heads so they can have sufficient money to meet their financial needs. However, life circumstances change. Our financial obligations are often reduced, and our kids assume responsibility for their own families. At some point, you may start questioning whether you still need that life insurance policy after you have retired.

Most of us purchase life insurance because we want to ensure that our loved ones have some measure of financial protection in the event of our sudden passing. We want to provide them with an umbrella over their heads so they can have sufficient money to meet their financial needs.

However, life circumstances change. Our financial obligations are often reduced, and our kids assume responsibility for their own families. At some point, you may start questioning whether you still need that life insurance policy after you have retired.

What the Experts Say About Life Insurance in Retirement

Financial experts agree that there's no one-size-fits-all answer to this question.

  • Bob Gavlak, a wealth advisor: "Sometimes life insurance makes a ton of sense to keep, and sometimes it makes no sense."
  • Jeff Vogan, a registered financial consultant: "The short answer is no. Probably not. But it's a little more complicated than that."
  • CNBC: "For the most part, life insurance is no longer needed in retirement since there's no income to replace."

However, CNBC also emphasizes the importance of considering your unique financial picture before letting your life insurance policy lapse.

5 Key Questions to Ask Yourself

For many retirees, the reason they bought that life insurance policy in the first place was to provide financial protection for their families — may no longer apply. Additionally, the annual premiums may become a financial burden.

Here are five questions seniors should ask themselves to make an informed decision:

  1. Are you married and have a spouse who needs financial support?
  2. Do you have a mortgage that needs monthly payments?
  3. Are you still earning a salary or pension that your family would need to be replaced?
  4. Do you have significant consumer debt that needs to be repaid?
  5. Do you want to leave funds for your grandchildren's education or other family legacy promises?

While this list is not exhaustive, it illustrates the types of issues to consider when assessing the importance of the death benefit for your loved ones.

Once you've answered these questions, weigh your answers against your current financial situation. Can you afford the life insurance policy premiums without straining your budget? Do you need a cash buffer for future expenses like long-term care?

“Conventional wisdom suggests you don’t need life insurance during retirement, but that isn’t necessarily the case,” according to “Should Retirees Have Life Insurance?” a 2017 article in the Wall Street Journal. “Among the factors to consider: how much you’ve saved versus how much debt you’ve accrued; your financial obligations; your income-replacement needs; your health and how long you expect to live; your tax situation; potential liquidity issues; legacy-planning goals; and charitable giving desires.”

Of course, it’s important to understand that no two retirees are alike. While many seniors may discover that their life insurance is no longer serving its original purpose, others may conclude that the policy still has value in their retirement plan and should be kept in force.

What if You Answer "No"?

Retirees who decide they no longer need their life insurance policy are often surprised to learn that their policy may have value to them right now.

Previously, most seniors simply lapsed or surrendered their life insurance policies back to the insurance company. However, there are now several options for converting unwanted or unaffordable life insurance policies into income-producing assets.

Out of these various options, the one that puts the highest amount of money into a retiree’s pockets is to sell the policy to a third-party investor through what is known as a life settlement.

The best way for retirees to determine whether they may be able to sell their life insurance policy is to rely on a licensed life settlement broker, like Welcome Funds, to assist them in all aspects of the deal process and potential transactions. The primary reason is that a life settlement broker represents a life insurance policy owner and has a fiduciary responsibility to serve the best interests of that client.

Getting the Highest Price When Selling Your Life Insurance Policy

At Welcome Funds, we believe the fairest way to fulfill our fiduciary duty to clients is through a transparent auction process. We invite potential buyers to submit bids for your life insurance policy. Simply put, the highest final bid is the winner of the auction. This auction model ensures that we obtain competitive bids for the policy and secure the highest possible price for the client.

For more information or to obtain a free, no-obligation appraisal of your life insurance policy, please visit www.welcomefunds.com.

 




Recent Blogs

Advisors Take Notice: New Report Forecasts Double-Digit Growth in Life Settlement Market

Advisors Take Notice: New Report Forecasts Double-Digit Growth in Life Settlement Market

Posted: April 01, 2024 by John Welcom

If you're a financial advisor with senior clients, it's important to be aware of the life settlement option. Life settlements can be a great way for seniors to generate immediate cash and el...

Passive Income Sources

Finding Cash Flow from Passive Income Sources

Posted: March 25, 2024 by John Welcom

Tired of chasing high-risk investments or selling off assets to cover retirement expenses? Discover 8 proven ways to create passive income streams and enjoy a more comfortable retirement. Plus, learn how a life insurance policy you no longer need m...

New Longevity Risk Underwriting Tools Improve the Stability of the Life Settlement Market

New Longevity Risk Underwriting Tools Improve the Stability of the Life Settlement Market

Posted: March 15, 2024 by John Welcom

The pricing of life insurance products is tied to the forecast of an insured’s life expectancy—what insurance experts call “longevity risk"—and relies on an estimate of the insured�...




Retirement and Life Insurance: Do You Still Need It? Retirement and Life Insurance: Do You Still Need It?