For most of your life, you have paid the premiums for your term plan. Now, that you’ve reached retirement or about to retire, what’s the right choice? Should you continue paying for insurance or terminate the policy? Find out now.
Should retirees continue paying for a life plan post-retirement?
Very often, retirees or individuals who are about to retire are confused whether they should continue paying the premiums for their life insurance plans post-retirement. Just like with all other financial queries, no one answer works for all.
Here, in this guide, we explore the reasons why retirees should or should not terminate their insurance plans post-retirement.
A Quick Brief on How Insurance Plans Work
An insurance plan is like a safety net. It provides your family with a bulk sum amount if something unexpected were to happen to you during the policy term. The main objective of term insurance plans is to provide survivors (dependents including your spouse, children and ageing parents) with a financial backup. It helps them overcome the financial loss they experience during the unexpected demise of the insured.
Are insurance plans a necessity post-retirement?
Majority of times, the sum assured by an insurance plan acts as a way to overcome the loss of income due to the untimely death of the policyholder.
The general idea here is that once you are retired, you would have probably crossed the stage in life where you have dependents – young children. Since, you don’t have any dependents, continuing to pay the premium of a term insurance plan does not make sense, as no one suffers from a loss of income due to your death. Also, most retirees do not have a regular income source that needs to be insured.
While it may seem like you no longer need life insurance post-retirement, it’s not always the case. Finding the answers to these following questions will help you decide whether you need to continue your term plan or not post-retirement.
- Do I have someone who will experience a financial loss after I die?
If the answer is no, then you can terminate your insurance plan. Let’s say, you’re a retired couple with financially independent children and both spouses have separate pensions to meet their expenses. In such instances, you can terminate your insurance plan.
On the other hand, if you have financial dependents who are relying on your pension, then it makes sense to continue the term plan post-retirement.
- Do I want to leave behind a legacy?
There are plenty of times when individuals want to leave behind a legacy for their children, grandchildren or their favourite charity. If yes, then you need to continue your life insurance policy post-retirement. The sum assured received on your death is distributed to your nominees after your demise. It’s like leaving behind a little fortune for your loved ones, when you are no more.
Opt for the Right Life Insurance Policy Post-Retirement
A whole life plan or permanent life plan offers a sum assured irrespective of how long you live. Make sure to analyse your family and financial situation and then decide whether you should continue or terminate your life plan, post-retirement.
