Are You Ever Too Old to Need Life Insurance?

As you get older, it may seem less and less prudent to carry life insurance. You could be retired, own your home outright and have kids who are self-sufficient. While for most people insurance is intended to protect you and your loved ones if you die prematurely, there are some financial situations where you may still need to consider if you need life insurance, how much life insurance you need and what your policy costs regardless of your age. Before you let your policy lapse or stop making payments, consider the reasons you might still need life insurance as a senior.

1. If You’re in Debt or Still Working

If you are still making payments on real estate deals, student loans or credit card debt, it’s a good idea to consider whether you still need life insurance. A term life policy that expires when your payments end is often recommended so you have coverage until the point of becoming debt-free. This can also make sense if you continue to work, even part time, to supplement your savings. While it depends on how much you earn and how much you need to save to make up income needs, you might need life insurance if your part-time job earnings are helping meet monthly costs for anyone else.

2. If You Have Dependents

Whether it is a younger spouse, sibling, disabled or non-adult child, or even your own parents, if you need to provide ongoing support to a loved one, you might want to continue your policy. Having dependents who rely on your financial support is the most common reason an income-earner needs life insurance.

3. If You’re Leaving a Charitable Legacy

If you are considering leaving a generous sum for your alma mater or favorite organization, you can use a life insurance policy to help benefit both you and the recipient. Instead of making annual donations (or in addition to them), a life insurance policy can help you leave a financial legacy.

4. If You Have an Illiquid Estate Subject to Taxes

If you have family business, depreciated stocks or valuables that you do not want your family to sell or pay taxes for inheriting, a permanent or cash-value life insurance policy can provide an immediate source of cash for your heirs.

5. If You Want Another Investment

Cash-value life insurance can be an investment if you have a lot of savings and do not like risk. Because of the tax-free growth and advantages of life insurance, these policies may be a smart way to diversify your investments.

For most seniors and especially retirees, insurance payments can seem like an unnecessary expense. But if any of the above scenarios apply to you, continuing your coverage may be a wise move.