Imagine this: You’ve said good riddance to your mortgage. You’re ready to say goodbye to your job. And you’re more than eager to spend every day of retirement living for you and your partner. You deserve to relax and not worry.
Considering you are approaching this exciting milestone, you might be looking at ways to cut down expenses in order to enjoy the funds you’ve worked so hard to save. One of the first to you might think about sending to the chopping block is your life insurance policy. After all, you don’t really need it now that you no longer have debts, right?
While many people entering retirement choose to forgo their life insurance premiums, there are a number of reasons why you might still need to be covered. Here are some factors to consider which will help you determine whether you need life insurance after you’ve retired.
Do You Have Dependents?
It’s the main reason you took out life insurance in the first place; to protect your family from financial burden in the case of death or permanent disability. But now the children are (finally) out of the house and making their own money, and you and your partner are financially comfortable. You may think “well, there’s little need for it”.
But if you have dependents – whether it’s a teenager who’s still headed for university or a child with special care requirements – who rely on your income, life insurance could be a practical approach to ensuring they are cared for when you die.
It’s important to remember that your children’s circumstances can rapidly change. If they are facing redundancy or are going through a separation, you may find yourself needing to be responsible for them and perhaps their children as well.
Even if you don’t have a child who’s financially dependent, it’s important to consider how your partner’s retirement finances will be impacted when you pass. Do they have the nest egg available for upfront funeral costs upfront when the time comes? If you become terminally ill before you pass, do you have the funds available from your savings and your superannuation to cover unexpected expenses like medical bills? If you discover that losing a portion of your finances will place your partner under financial stress, a policy could be the solution to balance out the difference and give them peace of mind.
Do You Want To Leave Something Behind?
The purpose of life insurance doesn’t always need to revolve around alleviating financial strain; it could also mean leaving a financial gift to loved ones or even a chosen charity.
Think for a moment about your kids. Is one struggling more financially than the others? Or could all of them benefit from a financial increase? Life insurance can play an important role in estate planning when deciding what you can leave for your family. It could also mean that they don’t have to sell off assets (i.e. the family business, stocks, jewellery, or property) to pay for any expenses caused by your death.
The same can be said for your beloved charities. If you would like to leave them a parting gift that’s more generous than your regular donations, life insurance could give you the option to pay one last respect to a good cause.
Do You Still Have Debts?
While owning a home outright is the Australian dream, many of us like to dip our feet into investment property market. Although your first home might have been paid off years ago, you may have additional debts due to investments, either property or business (think failed business ventures or investments too). Despite the fact your investments could hold some equitable value in the near future, will they still serve their original purpose (i.e. inheritance fund) if your beneficiaries have to sell hastily because the bill could no longer be paid?
So, what are we saying?
The option to continue on with your life insurance policy is completely dependent on your lifestyle and your family’s needs. Take a look at the people around you in your life and imagine their lives without you in the picture. Would they struggle financially? If you do decide that life insurance is a good option for you, remember to compare policies that align with your situation, ensuring you have the right one for you.