Can I Keep My Life Insurance When I Retire?

For most of your adult life, you likely had a life insurance policy. Most people get their life insurance policy from their employer and don’t think much about it. These policies are generally offered as part of a benefits package for full-time employees. It’s also possible that you took out a life insurance policy once you had children so that they would be protected if you died unexpectedly. 

However now that you’re about to retire, you might be wondering if you need to keep your life insurance in New Jersey. Once you retire, you won’t have benefits from your job anymore, so that means you have to take out a new policy or not have one at all. What’s the best option? 

Life Insurance is for Your Beneficiaries 

While there is no simple answer for everyone, we’ll do our best to explain the purpose of life insurance and why you may not need it anymore. 

When you take out a life insurance policy in NJ, you’re not insuring your life. You are protecting family members from the loss of income if you were to pass away. That’s why life insurance is highly recommended for working adults, as their families probably couldn’t keep up with their bills if they were to die unexpectedly. 

There are different types of life insurance depending on your needs and budget. Term life insurance offers coverage for a specific period of time, usually 10-30 years. Permanent life insurance is a lifetime policy that helps build cash value. 

Do Your Children or Spouse Depend on Your Income? 

If your spouse or partner will have a steady source of income if you die, then you probably don’t need life insurance. Many couples live off Social Security and their retirement savings so there’s no income to replace. But this isn’t the case for everyone. If your spouse will lose a substantial amount of your pension income, life insurance can help fill the gap. 

Another instance where you may want to keep your life insurance policy is if you have a spouse or adult children who are dependent on you. Even if they aren’t, some people like having something to leave their children or grandchildren. 

How Much Life Insurance Do I Need? 

If you plan to keep your life insurance after retirement, you’ll probably need to review it because there will be some changes. 

Think about your situation and the people who would experience a loss if you were to die today. What amount of money would allow them to keep living and paying the bills? This will help you determine how much life insurance you need. You’ll also likely find that a term insurance policy will fit your needs. We do recommend permanent insurance if you have a high net worth or a thriving business, as you could be subject to taxes. 

While this doesn’t give you a simple yes or no answer, we hope it provides you with some insight as to who needs life insurance in NJ when they retire and who doesn’t. To learn more about your options for retirement, schedule a consultation with Leonard Financial Solutions.