The Finance Blogger

This is a tough question that many baby boomers are trying to answer – How long do I need life insurance? They are near retirement or have retired and are trying to figure out when or if they should decrease or eliminate their life insurance. Your spouse should also be part of this discussion since any decision you make is going to impact them as well and will make a potentially huge difference in their lives if one spouse passes away and there is no life insurance or insufficient assets to provide for the remaining spouse.

The fundamental question is whether there will be sufficient funds to provide for your death, to support the surviving spouse in the proper way and to deal with any debts that you may leave behind. This is the question that needs to be answered and you can start by gathering all of the facts at the present time.

How long do I need life insurance?

What Information do you need to help answer this question?

This is a small list of information that should be gathered to help answer the question. Here we go:

Income

• Assets including savings and value in your home
• Current income for both you and your spouse
• Income that would stop if you were to pass away
• Current amount of insurance of all kinds

Expenses

• Current debts
• Funeral expenses
• Living expenses
• Living expenses that would terminate upon your death
• Health care expenses

Once you have all of this information, you can begin to calculate whether there will be enough money to fund all of the expenses that will exist after words for your estate. There are various calculators that can help, however we find that creating a spreadsheet with all of this information is a huge help allowing consumers to consider various scenarios.

Common Sense Approach To Insurance

If you are retired and have sufficient income to cover you and your spouse for expenses and the quality of life you desire, then maybe you will want to consider dropping or decreasing your insurance. If your income will drop significantly if one spouse passes away, you may need to consider retaining insurance to cover this loss of income.

There are also health issues to be considered. If you need to add insurance or change your insurance, the time to do this is when you are still healthy. Once a serious health event takes place, the cost of insurance can go up dramatically or you may not be able to get insurance at all after a health event. Consider taking out more insurance now when you are healthy if you feel that you need this insurance.

The early 50’s is the best time to address this issue and take whatever steps are needed at that time to address your insurance needs. Once you hit 65 or retire, re-evaluate your options and make a decision based on the facts at that time related to your financial situation.

Not Easy Questions

These are not easy questions to answer. There are some facts to work with; however there are many unknowns to deal with as well. Your decisions about these unknowns will impact your life significantly if you make the wrong decision. Our suggestion is to gradually decrease your life insurance after 65 if you have sufficient finances to handle all situations. Another is to read blogs like this one and use some of the calculators that are available online. But the best approach is to develop your own spreadsheet. Update the numbers every year to help you decide when it is best to decrease your life insurance. You can also take into account inflation and other special events that you may not have originally thought of.

Even if you only get your planning 50% right, it is better than no plan at all. Start today with a plan for your life insurance to assess what is needed. As you get older, your life insurance cost is going to increase. This is another factor to take into account.

Start your assessment today to begin your plan. Discuss it with you’re your spouse and other close family members. Make sure that you are covered adequately and that everyone is informed.

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