Life Insurance as a Retirement Safety Net for Seniors

Author: IntelliQuote
Published: 2011/10/05 - Updated: 2026/01/23
Publication Type: Informative
Category Topic: Life Insurance - Related Publications

Page Content: Synopsis - Introduction - Main - Insights, Updates

Synopsis: This information examines the strategic role life insurance plays in retirement financial planning, particularly during economic uncertainty. Drawing on insights from insurance industry experts and data from the Life Insurance and Market Research Association, the content addresses why retirees often mistakenly reduce or eliminate their life insurance coverage despite its value. The guidance proves particularly useful for people with disabilities who require long-term care planning, surviving spouses facing reduced income, and families managing mortgages or supporting adult children with disabilities. Practical applications include covering funeral expenses, estate taxes, mortgage payoffs, and creating tax-free inheritances - all critical considerations for seniors on fixed incomes who need reliable financial protection - Disabled World (DW).

Introduction

As many Americans scramble to deal with uncertain economic times, they can make some mistakes in their attempts to economize. One error that financial experts see far too often is the way many people - particularly retirees or people approaching retirement - cut back on life insurance. Gary Lardy, a respected insurance expert, says that tactic can create even more financial hardships for some people, and that life insurance can actually be an extremely useful tool for retirees trying to deal with a rough economy.

"Financial planning doesn't end when you retire," said Lardy, CEO of IntelliQuote, an online life insurance agency. "That's even more true in an uneven economy. Life insurance can work for retirees in a whole range of ways, from providing tax benefits, to protecting their estates, to providing financial security."

Main Content

Unfortunately, many Americans are going the opposite direction. Lardy cites studies from the Life Insurance and Market Research Association that show double-digit declines over the past six years in the number of husbands over age 65 who own life insurance. The numbers for wives are even worse.

"This is one of those cases when people trying to save money can end up costing themselves even more money," Lardy said. "That's why it's so important for everyone, and especially people on a fixed or retirement income, to understand what their insurance needs are and the ways life insurance can help them."

For instance, Lardy said, many retired couples live off social security or pension checks. But if one spouse dies, those payments will often be reduced while many of the expenses for the survivor will remain at the same high level. Life insurance can fill that gap.

There are other important ways life insurance can help retirees, such as:

Many couples retire still owing a significant amount on their home mortgage or second mortgage. Their retirement income may cover the monthly payments, but the right life insurance policy can pay off the rest of the debt when they're gone, allowing the surviving spouse (or partner) to comfortably keep their house.
A good life insurance policy can cover funeral costs, estate taxes, and other expenses that could be a major burden. Some couples even buy policies specifically to cover final expenses.
Retirees may be caring for an adult child with a disability. A life insurance policy can provide financial security for that child after they're gone.
The proceeds of a life insurance policy are generally tax free, so many people use life insurance to hand assets down to children and other heirs.

"Some people even name charity groups as beneficiaries of their policies," Lardy said. "Many people who have to take the mandatory payouts from their IRAs or 401(k)s, roll that money into life insurance. There are so many ways a life insurance policy can be useful. But most important of all is that it provides a safety net, and in these economic days, that may be more crucial for retirees than anyone."

IntelliQuote

A leading online life insurance agency since 1997, IntelliQuote provides customers simplified, private access to compare, shop and buy life insurance online, including term life insurance quotes. IntelliQuote offers clients a wide selection of competitive products from A-rated carriers, supported by licensed agents. This simplified approach makes purchasing a policy easy and straightforward while providing a savings of up to 70% per policy. IntelliQuote is a member of the LIFE Foundation and is committed to ongoing consumer education.

Insights, Analysis, and Developments

Editorial Note: The decision to maintain or adjust life insurance coverage during retirement deserves careful consideration rather than automatic reduction as a cost-cutting measure. While monthly premiums may seem like an unnecessary expense when no longer supporting young children or working, the reality is that financial vulnerabilities often increase with age - from healthcare costs to the loss of a spouse's income stream. Retirees managing disabilities, caring for adult children with special needs, or simply wanting to leave their home mortgage-free to a surviving partner will find that the right policy isn't just about death benefits, but about maintaining dignity and stability during life's final chapters. The tax advantages and estate planning benefits add another layer of value that fixed-income households can't afford to overlook - Disabled World (DW).