Do you need life insurance when you retire?

There's nothing better than finally being able to enjoy your retirement after years of hard work. Many people assume that once they retire, they no longer need protection like life insurance. But in reality, you could still need protection for your family and/or loved ones. Let's look at how a life insurance policy could still help you, even once you've retired.

What age do most people retire?

In the UK, the average retirement age is around 65 years old, though some people still work beyond this age if they choose to do so or are financially obligated to do so.

You can choose to retire regardless of your age or gender, providing you have enough money to last through your retirement years.

Why is life insurance needed in retirement?

Once you're retired, you may not see the need for having life insurance, but in retrospect it could be of great help to your family/and or loved ones. While you may no longer have a mortgage to pay off or children to support, there are still potential financial obligations that life insurance could be used to cover.

Life insurance could be needed for your retirement if:

• You have people who depend on you financially and could be impacted if you were to pass away. This could include a spouse, children, or other family members.
   

• You have outstanding debts that would need to be paid off in the event of your death. This could include credit card debt or if you still owe a mortgage.
   

• You wish to leave money for your family/loved ones as a gift after you're gone.
   

• You wish to cover the cost of your funeral so your family/loved ones won’t not have to.
   

• The value of your estate may exceed the inheritance tax threshold, and you wish to write your policy in trust.

If you no longer have dependants or financial commitments to protect, then you may not need life insurance cover. But you could still need it before retirement when you may have people who depend on you.

What type of life insurance is best for retirement?

There are a number of policies which could be useful both before and after you've retired, such as:

Whole life insurance

Whole life insurance - also known as life assurance - pays out a fixed cash lump when you pass away. The policy could last for the rest of your life as long as you continue to pay your monthly premium. Because cover could potentially be permanent, the premiums tend to be more expensive.

This type of policy could be useful if you need protection both before retirement and after, as it provides a guaranteed payout to your family and/or loved ones whenever you pass away.

You could also choose to have this policy increase over time by adding on indexation. This means that the sum assured would increase with inflation as time goes on. But please be aware that your premiums will increase as well. 

Over 50s life insurance

Over 50s life insurance is similar to whole life in that the policy will not expire at any point. As the name would suggest, over 50s cover is specifically for those aged 50 and over, but like a whole life policy, it pays out a cash lump sum when you die.

Unlike standard life insurance plans, over 50s plans include a 'waiting period' - the length of time (usually 1-2  one years) before a claim can be accepted if you die. Instead, the insurer will typically refund your premium should you pass away beforehand.

Over 50s cover could be useful as you approach retirement age and wish to be able to cover any debts if anything were to happen. You may wish to help fund your partner or spouse's retirement also.

Due to the guaranteed acceptance rules of this policy, Over 50s cover tends to have limitations to the amount you can be insured for. To find out more, please contact one of our specialist advisers on

01392 436193 (Monday - Thursday 9am - 5.30pm, Friday 9am - 5pm) 

How much life insurance will you need in retirement?

Essentially, your retirement lasts from the day you finish working until the day you pass away, which could be several years or even decades if you retire early. 

When calculating the amount of life insurance you need in retirement, you should consider:

• Any outstanding debts that would need to be paid off in the event of your death.
   

• The financial needs of your family/loved ones after you're gone.
   

• Whether your dependants would need a replacement of your income.
   

• Funeral costs and other end of life expenses.
   

• Whether your mortgage will be paid off before or after you retire.

If you're thinking about retirement, but are still unsure whether life insurance would be a good option, speak to one of our advisers. They can provide tailored advice based on your requirements for cover, as well as policy options.