Life Insurance After Retirement: Why Many Retirees Keep or Buy Coverage

Retiring doesn’t end the need for life insurance. It changes it. You no longer need to replace a paycheck, but other costs still land on your family. A funeral with viewing and burial had a national median cost of about $8,300 in the National Funeral Directors Association’s latest price study, and that’s before cemetery costs. Your household can drop from two Social Security checks to one. And there may be debts, or a legacy you want to leave. Here’s how retirees think it through, and which kinds of coverage fit.

Five reasons retirees keep or buy coverage

1. Final expenses

NFDA’s 2023 General Price List study put the national median for a funeral with viewing and burial at $8,300, and a funeral with viewing and cremation at $6,280. Neither figure includes a cemetery plot, opening and closing the grave, a headstone or marker, or extras like flowers and an obituary. (What a funeral really costs.)

Social Security doesn’t fill that gap. Its one-time lump-sum death payment is $255. It’s paid to a surviving spouse who was living with the person who died, or to certain other eligible family members, and it has to be applied for within two years.

2. A spouse whose income drops

This is the reason many couples overlook. When one spouse dies, Social Security doesn’t keep paying both benefits. The surviving spouse gets the higher of the two, not both. If you each get a check today, one of those checks stops.

Pensions can drop too. Federal rules require most traditional pension plans to pay married retirees a joint-and-survivor annuity unless the spouse agrees in writing to give it up. Even then, the survivor’s share can be as little as 50% of the original payment. If you chose a single-life payout, the checks stop entirely at death.

Meanwhile, the property taxes, utilities, car insurance and groceries don’t get cut in half. Life insurance can fill the gap between what the surviving spouse receives and what the household actually costs.

3. Debts that outlive you

A mortgage, a car loan, credit cards, final medical bills. According to the FTC, a person’s debts are paid from their estate, and family members usually don’t have to pay them out of their own money. There are exceptions, such as a cosigner or a spouse in some states. But the estate pays creditors before heirs get anything, so debts shrink what you leave behind. A death benefit can pay them off so the house doesn’t have to be sold.

4. Leaving something behind

Many retirees want to leave something specific: help for a grandchild’s education, a gift to their church, or simply an even split for the kids. Life insurance paid to a named beneficiary generally goes straight to that person rather than through probate.

5. Cash for the estate

If most of what you own is a house, a business, land or a retirement account, your heirs may need cash quickly for final bills, taxes or to buy out a sibling who wants their share. A death benefit gives them cash without forcing a quick sale.

Matching the need to the coverage

What you want covered	Coverage retirees often use
Funeral and final bills	Final expense whole life
Income for a surviving spouse	Term you already own, converted coverage, whole life, or guaranteed universal life
A mortgage or other debt	Remaining term coverage, or new term if your health allows
A legacy	Whole life or guaranteed universal life
Cash for the estate	Guaranteed universal life or whole life, sized to the estate

Your options

Final expense whole life

A smaller whole life policy built for funerals and final bills. There’s usually no medical exam, just a short list of health questions. The premiums never increase and the coverage never expires. Many managed conditions still qualify for full coverage from day one, depending on the carrier. To see what it might take to cover your funeral, try our final expense calculator, or read how burial insurance works.

Keeping or converting the term you already have

If your term policy still has years left, keeping it is often the simplest move. If it’s ending soon, a conversion privilege may let you turn it into permanent coverage based on your original health rating. Read your options when term is expiring. If your main coverage comes through work, find out what happens to it when you retire, because the conversion window there is usually short.

Guaranteed universal life (GUL)

Guaranteed universal life is permanent coverage designed mainly for the death benefit. The guarantee lasts to an age you choose when you buy it, and the available ages vary by carrier. It usually builds little cash value, which is why it often costs less than whole life for the same death benefit. The catch is that you need to pay on time, because late or short payments can shorten the guarantee.

Whole life

Whole life has a guaranteed death benefit, premiums that stay level, and guaranteed cash value growth. It costs more for the same coverage amount, but it’s the most predictable choice and a good fit for legacy and final-expense needs.

How much is enough?

Add up the funeral you’d want plus cemetery costs, final medical bills, the debts you’d want paid off, the income your spouse would lose, and anything you’d like to leave. Then subtract savings your family could reach quickly. Your number is your own, and it doesn’t have to be large to make a real difference.

Age matters too. Every birthday raises the price of new coverage, and a new diagnosis can narrow your options. Our guide to life insurance in your 60s covers what’s still available, and there’s a guide for your 70s as well.

Frequently asked questions

Is life insurance worth having after retirement?

For most retirees, yes. At a minimum, it can keep a funeral and final bills from falling on your family. It can also protect a spouse whose income drops when a Social Security or pension check stops, pay off debts, and leave a legacy.

Will my spouse get both of our Social Security checks?

No. A surviving spouse who qualifies for more than one benefit gets the higher amount, not both. The smaller check stops, which is why many couples plan for that drop with life insurance.

Does Social Security pay for a funeral?

Not really. It pays a one-time $255 lump-sum death payment to an eligible surviving spouse or child, and you have to apply for it within two years. The national median for a funeral with viewing and burial is about $8,300 before cemetery costs.

Can I still get life insurance in my 70s?

Often, yes. Many final expense plans accept applications into your 80s, and your health answers decide which tier you qualify for. Carriers make the final decision, and rules differ from one company to the next.

Should I cancel my life insurance when I retire?

Not before you compare. An older policy may be priced from when you were younger and healthier, and it may be hard to replace. Never cancel a policy until any replacement is approved and in force.

What’s the difference between guaranteed universal life and whole life?

Both can cover you for life. Guaranteed universal life focuses on the death benefit and usually builds little cash value, so it often costs less. Whole life builds guaranteed cash value and has level premiums, so it costs more for the same amount.

Let’s look at your numbers

We’ll help you size your coverage honestly and compare final expense, term and permanent options across many carriers, including what you’d qualify for with your health history. Get a quote or call 586-343-1505.

Sources: National Funeral Directors Association, 2023 General Price List Study release (median funeral costs and what they exclude); Social Security Administration, If You Are the Survivor (the higher of the two benefits, not both); Social Security Administration, Lump-sum death payment ($255, eligibility, two-year deadline); IRS, Retirement Topics: Qualified Joint and Survivor Annuity (50%–100% survivor annuity, spousal consent); FTC, Debts and Deceased Relatives.