Review Your Insurance Needs When You Retire
Retirement is a good time to review whether your your insurance needs have changed. Take the time to consider your insurance options, to decide what you need or don’t need and possible savings.
Life Insurance. Don’t automatically presume that you no longer need your life insurance policies after you retire. If you have a mortgage, it may be a good way to ensure that your surviving spouse or children won’t be burdened by monthly mortgage payments. You may also be counting on the policies to pay a large tax-free benefit to your family, or to pay estate taxes.
Another use for a life insurance policy could be to help fund long-term care costs. You may be able to sell larger policies, whether term or whole life, and be paid more than its cash surrender value. The amount you’ll receive increases if you are very old or in ill health. Don’t simply drop policies or cash them in without first consulting with your attorney or insurance professional.
If you’re in very good health, you might be able to exchange an existing policy for a new policy with lower premiums or a higher death benefit due to changes in actuarial tables.
Health Insurance. If you retire before Medicare starts at age 65 and without retiree health benefits, you will need to buy health insurance. Through COBRA you may be able to stay on your company’s policy for up to 18 months but after that you will have to find an individual policy. Check with professional organizations since some offer offer health insurance. To reduce costs, you might select high-deductible plan. Be sure to make the transition to Medicare when enrollment is available at age 65; otherwise you could be charged more for Medicare later.
Long-Term Care Insurance. If you don’t have long-term care insurance and you are healthy, consider this as a way to get more care at home or cover other long-term care costs. The premiums will be less if you buy when you’re younger. One of the objections to traditional long-term care insurance is that you can pay premiums year-after-year and then get nothing out of it. A good alternative to consider is policy that combines life insurance with long-term care. That way, either your family will get a death benefit or you can have help paying for care during your lifetime. This also depends on having good enough health to qualify, so it’s best to start before serious or chronic health problems arise.
Homeowner’s Insurance. Even though you may no longer have a mortgage, you need homeowner’s insurance for possible fire and liability coverage. Check into possible discounts with your insurance company. You also may consider raising deductibles to reduce premiums. Consolidating coverage for homeowners and automobile insurance can cut costs too.
Auto Insurance. You may be entitled to a discount based on your age, but it will be up to you to ask your insurance company. Also, if you’re no longer commuting, your premiums may go down.
Umbrella Coverage. Inexpensive personal liability insurance is available for coverage for lawsuits against you. You don’t want a lawsuit to devastate your retirement savings. This can help on claims above the liability limits on your homeowners or automobile insurance,. It is especially important for landlords to add this relatively inexpensive layer of protection.