Do You Still Need Coverage in Retirement?
If your mortgage is paid off, children are financially independent, and you have sufficient savings, you may not need life insurance in retirement. Many people let their term policies expire when they no longer have financial dependents.
However, there are still reasons to maintain coverage: funeral costs, surviving spouse income needs, estate tax liquidity, charitable giving, or leaving a legacy.
Using Cash Value in Retirement
If you have a permanent life insurance policy with substantial cash value, you can access it during retirement through policy loans or withdrawals. Loans are tax-free as long as the policy stays in force.
Some retirees use a strategy called 'retirement income bridging' — taking tax-free loans from cash value during early retirement years while delaying Social Security to maximize benefits at age 70.
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Get Your Free QuoteConverting or Selling Your Policy
If you no longer need your permanent policy, you have options beyond simply canceling it. A 1035 exchange allows you to transfer the cash value to an annuity tax-free, creating a guaranteed income stream.
Life settlements allow seniors (typically 65+) to sell their policy to a third party for more than the cash surrender value but less than the death benefit. This can be appropriate for policies you no longer need or can no longer afford.