3 important insurance considerations for retirees

4 MIN READ | #blog

As you approach retirement, your lifestyle changes…and so should your insurance concerns. Insurance policies are designed to help protect your livelihood, your loved ones, your property, and those around you. Some forms of insurance you may consider altering or having reviewed, while others — such as auto and home insurance — remain a necessity while you’re living an active lifestyle. Here are three insurance categories that may change, increase, or decrease as you approach retirement.

Protecting your livelihood

Throughout your working years, you most likely carried some form of disability insurance. Short-term and long-term disability insurance provides income in situations when you are too ill or injured to work. Whether you were covered by a group plan, a private policy, or a combination of the two, once you retire from work, there is no longer the same requirement to cover working income. The combination of Social Security benefits and retirement savings will form the protection that covers your basic needs.

Protecting your health

While eligibility for Social Security begins at age 62, Medicare doesn’t kick in until age 65, leaving a considerable gap for many retirees. Having a solid health care plan during retirement is critical. A 2021 analysis by the Employee Benefit Research Institute (EBRI) projected that a 65-year-old couple with median prescription drug expenses would only have a 50% chance of having enough money to cover health care expenses (excluding long-term care) with savings of $182,000. The same couple would need $296,000 to have a 90% chance of being able to adequately cover medical expenses throughout their retirement.1

Few, if any, employers extend healthcare coverage to employees after they retire. If you can’t secure coverage through your spouse’s plan — or if you’re single — you’ll need to pursue additional options. Group coverage may be offered through professional societies in your industry or through community organizations, such as your church. Many private insurance plans are customized to the needs of aging adults, and supplemental coverage is available after Medicare coverage begins at age 65. Review the premiums, deductibles, co-pays, and annual out-of-pocket limits as you evaluate policies. Factors influencing your choice should include financial considerations as well as your own health and wellness. If you’re managing a chronic condition, you’ll need to find a policy that can provide coverage when you need it the most.

Protecting your loved ones

As you plan for your retirement, it is important to maintain alignment between your past, your present and your future. When you initially purchased life insurance, you probably worked with your financial representative to make sure that the right amount and type of insurance was in place to help protect your life, family, business and future — for generations to come.

If you purchased a permanent policy, you may have planned on using that insurance to accumulate wealth along the way. You may have also bought life insurance for one of the following reasons:

  • Make sure your family would have income if something were to happen to you
  • Provide ongoing care for a child with special needs
  • Help ensure that your debts would be paid in the event of your death
  • Protect and preserve your assets from tax consequences1
  • Pass on your legacy to your family
  • Protect your business
  • Reward and retain key employees

It is important to consider a review whenever a major life event has happened or is expected to in the near future. Retirement definitely qualifies as a major life event. Remember to discuss this transition with a life insurance professional to better plan your retirement. They may make a suggestion to utilize your policy in different ways, such as continuing to protect your spouse from your untimely death, possibly supplementing your retirement income with the policy cash values,2, 3 or utilizing it for estate planning purposes.

No matter the form of your policy, your goal remains the same: to prevent your family from a significant financial burden. For many retirees, in addition to life insurance, they may also investigate long term care.

As you approach retirement, your lifestyle and work habits will change, but your priorities will likely remain the same. Protect your loved ones from financial burden and ensure that your retirement strategy is protected.

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2022-145502 Exp. 10/24

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1 https://www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_549_savingstargets-13jan22.pdf?sfvrsn=67983b2f_2


2 Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

3 Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.

4 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59½, any taxable withdrawal may also be subject to a 10% federal tax penalty.

This material is intended for general public use to potentially assist you in planning for your future. By providing this material, Guardian/Park Avenue Securities is not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity.

Guardian and its affiliates, subsidiaries, employees, agents, and outside contributors, are not authorized to provide legal, tax, or investment advice in the materials of this website including but not limited to any blogs. The information provided does not constitute a solicitation of an offer to buy or an offer to sell financial or insurance products. Individual situations can vary; please contact a financial professional, your tax, investment or legal advisor for guidance and information specific to your situation. Guardian is not responsible for the consequences of any decisions or actions taken in reliance upon or as a result of the information provided by this material. To learn more about Guardian, visit GuardianLife.com.