Do I Still Need Life Insurance in Retirement?
Once the kids are grown, the mortgage is paid off, and you’ve stopped working, it might seem like life insurance no longer serves a purpose. But in reality, life insurance in retirement can still play a vital role—especially when it comes to leaving a legacy, offsetting taxes, or covering final expenses. Depending on your goals, the right policy could be more valuable now than ever before.
One common reason to maintain life insurance in retirement is to help replace income for a surviving spouse—especially if one or both of you rely on Social Security, pension payments, or annuity income that could be reduced after death. A life policy can ensure your spouse has continued financial stability.
Another is estate planning. A life insurance death benefit can help your heirs cover taxes, avoid selling off assets, or settle debts. It can also be used to equalize inheritances or support charitable goals. For high-net-worth individuals, life insurance is one of the most tax-efficient wealth transfer tools available.
And finally, life insurance is often used in retirement to cover final expenses, ensuring your loved ones aren’t burdened with funeral costs, medical bills, or legal fees.
At Diversified Insurance Brokers, we review your current coverage and evaluate whether it still aligns with your goals. If you no longer need the policy, we’ll help you explore your options. If you do, we’ll make sure it’s structured in the most efficient way possible.
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FAQs: Life Insurance in Retirement
Do I still need life insurance in retirement?
Many retirees still need life insurance to protect a spouse, cover final expenses, replace Social Security income, or leave a tax-free inheritance. The right amount depends on your income sources, assets, and goals.
What type of life insurance is best for retirees?
Permanent life insurance is common in retirement because it provides guaranteed lifetime coverage. Some retirees use term insurance for short-term needs, while others leverage guaranteed universal life (GUL) for long-term affordability.
Can life insurance replace lost retirement income?
Yes. A death benefit can help replace lost pension income or one spouse’s Social Security benefit, helping surviving family members maintain financial stability.
Is life insurance taxable for retirees?
The death benefit is generally tax-free. Cash value growth inside permanent policies is tax-deferred, and loans can often be taken tax-free when managed properly.
Can retirees use life insurance for long-term care?
Yes. Some policies offer long-term care or chronic illness riders that allow tax-free access to the death benefit to help cover care costs.
Is life insurance still affordable after age 60?
Coverage is still available, but pricing depends on age and health. Many companies offer competitive rates for healthy retirees up to age 80 and beyond.
Should I keep my existing life insurance policy?
Often, yes—especially if the policy is affordable or has cash value. Before canceling, review whether it still provides value for estate planning, income protection, or tax-free legacy goals.
Can life insurance support estate planning?
Life insurance can help pay estate taxes, equalize inheritances among children, or pass wealth tax-free to beneficiaries.
Does life insurance affect Medicare or Social Security?
No. Cash value growth does not reduce benefits, and the death benefit does not count toward income-related Medicare surcharges or Social Security taxation.
How much coverage should a retiree carry?
Coverage depends on debts, income needs, estate goals, and family circumstances. Many retirees choose enough coverage to replace income, cover final expenses, or leave a legacy.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
