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There are many benefits to having a life insurance policy in retirement.  It can cover estate settlement costs and final expenses, pay debt, supplement income, and more. Unfortunately, many Americans are underinsured or only have life insurance through their employer.  According to the Life Insurance Marketing and Research Association (LIMRA) 2023 Insurance Barometer Study, 54% of U.S. workers say they have life insurance through their workplace, and 67% of those people rely solely on employer-provided life insurance. [1] A person without an individual life insurance policy outside the workplace will have no coverage when they retire. 

With that said, it isn’t necessary for everyone to have life insurance in retirement. A debt-free individual, who has pre-paid their final expenses, and isn’t concerned with leaving an inheritance to their beneficiaries may not want to take on the added cost. But it’s worth considering for those who lose their employer-provided insurance upon retirement, don’t have all their financial bases covered, or want the added advantages of an individual policy. Here are some criteria that individuals should use to assess their needs as they approach retirement:

  • Financial situation—Consider all sources of income including savings, pension, investments, and Social Security benefits. Analyze current debts and expenses and which may still be outstanding in retirement.   
  • Dependents—If a spouse or other dependents could face financial hardship without the additional income or support, life insurance can help.
  • Health and life expectancy—Certain medical conditions, risk factors, lifestyle choices, and life expectancy can impact the eligibility and cost of life insurance. It’s best to secure a policy in good health with minimal risk to maximize affordability.  [2]

Misconceptions about Life Insurance

Forbes Advisor conducted research in 2024 on life insurance statistics and found that 41% of adults reported having insufficient life insurance coverage. [3] The study revealed many misconceptions about how life insurance works and how much it costs, which may prevent individuals from obtaining coverage. Here are a few common incorrect assumptions people make about life insurance.

  • It’s expensive—According to Forbes Advisor, 82% of consumers think the cost of coverage is three times more than it is. The average cost of a representative term life insurance policy is about $20/month (based on a 10-year, $500,000 term life insurance policy for a healthy, 40-year-old male buyer). [4] The cost of a policy can vary by provider and be impacted by age, health, and risk factors, but for a generally healthy, low-risk, middle-aged person, it is affordable. Term life insurance is the least expensive option, so individuals should opt for a term policy if cost is a concern.
  • Group life insurance through work is enough—The low or no-cost group life insurance many employers offer is a wonderful benefit every employee should take advantage of. However, this insurance may not provide adequate coverage in a tragedy. The employer determines the amount of coverage, for example, one year’s salary, and the policy expires when an employee leaves the company.
  • Household income and family size impact cost and eligibility for insurance— Providers consider many factors including age, criminal history, driving record, gender, health, occupation, and risk factors including nicotine, marijuana, and drug usage when quoting policies. However, income and family size are not considered when quoting life insurance.
  • Life insurance will not cover illness-related deaths—Life insurance typically covers several death circumstances, including those that result from illnesses. Accidents of all types; heart attacks, heart disease, unintentional drug overdoses, homicides, and death outside of the U.S. fall under the coverage that life insurance policies provide.  

Types of Life Insurance

There are several life insurance plans to consider. 

  • Term Life—This policy covers a specific period, commonly 10, 20, or 30 years. Generally, less expensive than permanent insurance, these plans only pay a benefit if death occurs during the active term.
  • Whole Life—As long as the holder pays the premiums, these plans provide coverage throughout life. Some policies can also build cash value over time, which the holder can borrow against or withdraw.
  • Universal Life—This plan features flexible premiums, death benefits, and a cash value component that grows based on policy performance or a minimum interest rate.
  • Guaranteed Universal Life—This plan can provide additional stability when it comes to cost and benefit amounts as long as you pay your premiums but less flexibility when it comes to policy adjustments. 

Benefits of Life Insurance

Policyholders (and beneficiaries after the policyholder dies), can use life insurance benefits for just about anything, but here are some popular uses for it.

  • Income replacement for dependents—Life insurance can financially support a policyholder’s spouse or dependents in the event of death. In retirement, if the holder has not accumulated enough savings to sustain a spouse or dependents, this can be particularly helpful.
  • Debt repayment—Life insurance money can be used to pay off a mortgage, car loans, credit card debt, and just about any outstanding debt so loved ones are not burdened by these financial obligations. 
  • Estate planning—Life insurance can provide liquidity to pay estate taxes, legal fees, and other expenses for estate planning, so heirs do not have to sell assets to cover them.
  • Legacy and charitable contributions—Retirees can use their life insurance to leave a legacy for their children or grandchildren. Alternatively, the money can be used for a charitable donation.
  • Covering final expenses—Funeral and burial costs are expensive and can pose a significant financial burden for a family during a difficult time. Life insurance can pay for those expenses. [6]

Not everyone needs a life insurance policy in retirement but there are benefits to having one, and they are more affordable than most people think. Timing is important, as age is a consideration, as is the condition of an applicant’s health. Those wishing to obtain a policy should do so while in good health and before they retire. A financial advisor at SHP Financial can recommend plans based on client savings and portfolio. Click here for a complimentary review of your finances today.








The content presented is for informational purposes only and is not intended as offering financial, tax, or legal advice, and should not be considered a solicitation for the purchase or sale of any security. Some of the informational content presented was prepared and provided by tMedia, LLC, while other content presented may be from outside sources believed to be providing accurate information. Regardless of source no representations or warranties as to the completeness or accuracy of any information presented is implied. tMedia, LLC is not affiliated with the Advisor, Advisor’s RIA, Broker-Dealer, or any state or SEC registered investment advisory firm. Before making any decisions you should consult a tax or legal professional to discuss your personal situation.Investment Advisory Services are offered through SHP Wealth Management LLC., an SEC registered investment advisor. Insurance sales are offered through SHP Financial, LLC. These are separate entities, Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC.. In addition, other supervised persons of SHP Wealth Management, LLC. are independent licensed insurance agents of SHP Financial, LLC. No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC. and SHP Financial, LLC. will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product.
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