You’re no longer working, and the kids are all grown up. Do you really need your life insurance policy now?
It’s taken a long time but you’re finally free to enjoy your golden years.
You’ve worked hard all your life and saved for this very moment. The kids are all grown up and they’ve moved out of the house.
Now, it’s time for you to sit back, rest, and enjoy the freedom that retirement brings.
But you remember you’re still paying for your old life insurance policy.
Your mind starts turning. You figure that you’ll likely die of old age at some point. And with the kids all grown up, maybe you don’t need to have life insurance any more. It would be one more expense to cross off the list, right?
It would be.
But are you sure that you don’t need life insurance any more?
There are many reasons why you might choose to maintain a life insurance policy, even if you are retired. Here are six that show you why it’s still likely to be worth the money you’re spending.
Reason #1 – The cash benefit can cover your final expenses
When you pass away, you will probably leave behind some final expenses for which your family may need to pay.
Take your funeral as an example. This final ceremony can cost anywhere between $4000 and $15,000. And, if you haven’t saved money for that event, your family will need to pay for it.
There are also costs associated with your estate. Your family may also need to pay an inheritance tax in respect to the assets that you leave for them in your will. Additionally, any complications with your estate could lead to further court costs.
These are all things for which many families don’t prepare. But with your life insurance policy still in place, you can help ensure that your loved ones can fund these final expenses.
Reason #2 – Paying off any debts that you leave behind
In an ideal world, you’ll retire with no debt to your name.
Unfortunately, that’s looking unrealistic for many Australians. And we can look to figures from the Australian Bureau of Statistics to prove it.
They examined how many people on the verge of retirement still have debt. The study found that 47 per cent of people aged between 55 and 64 still have a mortgage to repay. That was in 2015. And it’s more than triple the 14 per cent who had mortgage debt in 1990.
This proves it’s entirely possible that you, too, may have a mortgage to pay when you retire. Not only that, you may also have credit cards and other personal debts to repay. And, even if you don’t have a mortgage right now, what if you choose to access some equity? That puts you right back into debt.
If you die soon after, there’s the real prospect that you could leave that debt behind for your family.
A life insurance policy can help to manage any debt when you’re gone. The lump sum you leave behind could pay off some or all of it, meaning your family is under less pressure to fund it on your behalf.
Reason #3 – Accounting for other financial losses
There’s a definite trend towards Australians working beyond retirement age.
Moving into a part-time job allows you to generate some extra income, for starters. Plus, work gives you a way to stay active and feel like you’re still engaged with your community.
If you make that choice, you need to consider the impact that loss of income could have on your family. After all, you’re probably using your employment income to create a certain standard of living in your golden years.
A good life insurance policy can help ensure that your family doesn’t struggle should you pass away while still working.
Reason #4 – Continued support for your extended family
Many of you may have taken out life insurance earlier in life to provide a degree of financial protection for your family in a worst-case scenario.
But now you’ve retired, your outlook may be changing.
Your children are all grown up. They’ve moved out of your home, have jobs, and started their own families. Maybe they no longer need the money that you’d leave behind. And the money you save on premiums could instead go towards funding your retirement.
You may wish to think further into the future.
For example, do you have grandchildren? If so, your life insurance benefit could go towards paying for their education. Or, they could use it to pay for the deposit on a home. This also means that your own children may experience less financial hardship later on.
Furthermore, your adult children may not be as financially sound as you’d like them to be. According to a recent survey, 61 per cent of parents still provide financial support to their adult children. The benefit from your life insurance could help your kids deal with their debts and make life easier for them.
Reason #5 – The cash benefit could support your preferred charity
Perhaps your children don’t have any of the financial issues mentioned above.
Even if that’s the case, you can still find a use for your policy’s cash benefit. For example, you may use it to support a charity or cause that you care about.
According to Philanthropy Australia, 80.8 per cent of Australian adults give to charity in some form. This means there’s a four-in-five chance that you have a cause you’ve actively donated to in your life.
Imagine the difference that the full sum of a life insurance benefit could make to one of these charities, if you have validly nominated them as the beneficiary. Your life insurance policy gives you the chance to leave a legacy of helping those who you feel need it most.
Retirement doesn’t have to mean the end of your policy
There are many reasons why you may want to keep your policy active when you retire.
Ensuring your family is better placed to handle your final expenses and any debts you leave behind may be the most immediate. However, your life insurance benefit also gives you the chance to leave a legacy. Whether that’s for a charity or your own family is up to you.
Your policy could also provide support for your significant other if you pass away earlier than expected.
So, this leads you to the key question:
To insure or not to insure?
That is a question only you can answer. You may choose to get some professional advice, or to carefully consider your own needs and circumstances and deal directly with a life insurer, such as NobleOak, which can provide you with product information. This is general information only and does not take into consideration your individual circumstances, objectives, financial situation or other needs.
To learn more about NobleOak’s life insurance products or to request a quote, call NobleOak on 1300 041 494. Mention Your Life Choices to receive your special member offer.
NobleOak is a YourLifeChoices preferred partner.
Important Information – This is an advertorial for NobleOak. NobleOak Life Limited ABN 85 087 648 708 AFSL 247302 is the issuer of NobleOak life insurance products. Please read the PDS available on the website at www.nobleoak.com.au for information and product terms. This is general information only. Online quotes are indicative. You should not cancel any existing life insurance policy until you have been informed in writing that your new cover is in place. NobleOak cannot provide you with personal advice, but our staff may provide general information about NobleOak Life Insurance.
Resources:
https://www.quotacy.com/10-reasons-why-you-may-need-life-insurance-in-retirement/
https://www.thebalance.com/i-retired-do-i-still-need-life-insurance-2388602
https://lifehappens.org/blog/6-reasons-for-life-insurance-when-you-retire/
https://theconversation.com/more-people-are-retiring-with-high-mortgage-debts-the-implications-are-huge-115134
https://www.dss.gov.au/about-the-department/benefits-payments/bereavement-payment
https://nationalseniors.com.au/news/latest/five-million-parents-providing-handouts-to-adult-kids
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