While most people think of younger or middle-aged adults when it comes to life insurance, the truth is that many retirees still have a need for a policy. If you’re retired and haven’t yet taken out life cover, you may struggle to find an insurer who will cover you, depending on your age. If you already have a policy in place, here’s what you should consider before you decide to cancel.
Do you still have debt?
Is your house fully paid off? Is your car paid off? Do you have any outstanding payments on credit cards? If you have any debt whatsoever, then it’s best to keep your life insurance policy in place. If you cancel the policy without covering your debt first then a surviving spouse or child could be liable for your debt.
Do you want to leave money to children, grandchildren or even a charity?
If you want to leave some money to, say, your grandchildren to ensure that they can go to University, life insurance is a good way to do this. You won’t need to save up through your pension or take a chunk out of your retirement fund – you just need to stipulate in your Will that you’d like a certain amount of money to be left to a specified person for a specific reason. The same goes for leaving money to charity – if you’d like to leave a donation to a charity that is close to your heart, life insurance payouts are an easy way to guarantee this.
Do your spouse or children rely on your pension?
If your spouse relies on your retirement annuity, pension, or any state grants then it’s possible that they may not be eligible if you were to pass away. In this instance, you should keep your life cover in place. If your children are grown up but are still dependent on you – i.e. they live in your house or rely on you financially somehow, it’s best to keep the security net of your life insurance policy in place.
When is it safe to cancel?
If you are totally debt free, don’t have any dependents who rely on you financially and don’t want to leave any donations or inheritance to anyone, you could consider cancelling your life policy. You’d also need to ensure that you have enough money left to provide the kind of funeral you would want. Bear in mind though, that if you’re over 65 and have cancelled your policy, it will be incredibly hard for you to get another one if you change your mind. Your premiums will also be much higher, so think carefully before deciding to cancel your life insurance.