What Happens to Your Life Insurance When You Retire?
What Happens to Your Life Insurance When You Retire?
When you're at your job, a life insurance policy is a great idea. After all, you want peace of mind for your family if anything happens to you.
But if you get your policy through your employer, you may be wondering what happens to your policy when you retire. Does it go away, like your health insurance policy? Do you keep it? It's an important question, especially toward the end of your life when you face significant hidden healthcare costs.
If you're not sure what happens to your life insurance retirement plan (or debating whether to keep your life insurance Vancouver plan in the first place), here's what you need to know.
The Fate of Your Life Insurance Plan When You Leave a Job
Life insurance companies talk a lot about what happens at the end—of your life, anyway. When you die, your life insurance benefits are passed on to your named beneficiary, often a spouse or dependent children as a way to replace your lost income.
But what happens when you retire?
The short answer: you lose your group life insurance policy when you leave your job.
The long answer: it's complicated.
When you get a life insurance policy through your employer, it's a group life insurance policy where the employer is the policyholder and employees are a designated group who can receive coverage under the plan. Ergo, the only ones eligible for coverage under the plan are current employees.
However, there are workarounds.
Converting Your Life Insurance Policy
If you're planning to retire but want to keep a life insurance policy like you had while working, your first step is to head to HR and ask if your policy is portable. In most cases, an employer-offered group policy is not portable, meaning you can't take it with you when you change jobs or retire.
However, it may be portable in a different sense: you may be able to port your group policy into an individual term life insurance policy. You may also be able to convert your group policy into an individual whole life insurance policy.
That said, you should expect to pay way more than you did while working. The policy provided through your employer was provided essentially for free. That same policy with the exact same coverage can get quite expensive in retirement.
Do You Still Need a Life Insurance Retirement Plan?
So, if you keep your life insurance premium, the question is whether it's still worth it in retirement. There are four questions that can help you figure this out:
- Do you have a lot of debt?
- Do you have loved ones who would be significantly financially impacted if you died?
- Do you want to replace your retirement income?
- Do you have a permanent policy now?
If you answered yes to any of those questions, it may be worth keeping your policy.
Your Trusted Source for Life Insurance Vancouver
Of course, a life insurance retirement plan faces much steeper costs than employer-provided plans. And if you're looking for life insurance Vancouver, you need a way to find quality policies with reasonable rates.
That's where we can help. We make it easy to find reasonable plans with solid coverage, all in one easy location. So if you're ready to invest in peace of mind, get a quote today.