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Like most adults, you’ve probably had life insurance at some point. It may have been term insurance as part of a smart financial planning strategy while your children were young, or maybe it was a whole life insurance policy offered by your employer as part of a benefits package.
Now that you’re closer to retirement, you may be wondering whether life insurance is still necessary. Once retirement comes and you no longer have life insurance provided by your employer, you’ll have to decide whether to purchase a new policy or enter your golden years without coverage.
This is a crucial decision to make, and because your needs will differ from those of your friends or neighbors, it is a decision you have to make for yourself. There is no easy answer, and various factors in your life will contribute to your decision-making. To help guide you, here are a few questions to ask yourself.
Do You Already Have a Permanent Policy?
If you have a permanent life insurance policy, this would be an excellent time to review it. Make sure the coverage is large enough to cover your needs, from funeral expenses to paying off outstanding debts and leaving financial gifts to loved ones. Out of pocket expenses may have climbed significantly in the years since you signed up for this policy. If you find that it does not offer enough coverage for your current and future needs, schedule an appointment with an advisor to explore your options.
Do You Have Debt?
After your passing, your estate must pay your debts first. Only then will any remaining assets be passed on to your beneficiaries. If your spouse or someone co-signed your debt, that person is generally responsible for paying it off. Your estate can potentially pass on unencumbered by using your life insurance policy to pay off your debts. If you are carrying a mortgage, life insurance can ensure that it gets paid off and that your surviving partner can remain in your family home.
Do You Want to Leave Your Loved Ones Financially Secure?
Perhaps you have a spouse, adult children, or others who depend on your financial contributions – a life insurance death benefit is tax-free and could ensure a comfortable life for them after your passing. If you are supporting a child with special needs, a life insurance payment could also help provide them with the unique ongoing care they require.
Does Your Spouse or Partner Have Enough Savings?
If you have been the sole or significant income provider in your household, your partner may not be eligible for maximum retirement benefits. Once you pass, will they receive enough to cover household and living expenses on their own without your financial contribution? Will they be able to remain in their home? A life insurance payment can help ensure they continue maintaining their current lifestyle without financial hardship after you pass. A payout from a life insurance policy is tax-free and generally will not interfere with a loved one’s ability to collect government disability benefits or the GIS.
Is There a Cause or Charity You Wish to Leave a Legacy?
Perhaps you have a cause close to your heart or a favourite charity? Some people list these organizations as the beneficiary of their life insurance policy, bestowing a special gift after they are gone.
Will You Require Additional Care?
Most permanent life insurance policies have a cash value. You can potentially tap into this additional source of funds if you need it. The cash value could be available to help provide extra nursing care, a better retirement home, or to allow you to remain in your own home longer.
Even after you’ve retired, securing a life insurance policy can help ensure that your loved ones maintain their lifestyle. Ultimately, your lifestyle, goals, and family’s needs should be factored carefully into any decision you make.
Most life insurance plans are available up to age 80. It’s better to secure a policy earlier rather than later, as premiums tend to go up with age. You can choose between traditional (fully underwritten) life insurance or No Medical life insurance, where no medical exams or tests are required to apply. If you decide that a new policy might be right for you, reach out to an advisor to learn about different options and continue your journey towards enjoying the peace of mind that comes with financial security for you and your loved ones.