The insurance you need - and may not need - after 60 [Boss Insurance]

By Christine D. Moriarty

Rethinking your insurance can save you money

This article is reproduced with permission from NextAvenue.org.

When it comes to insurance, most people are on autopilot; once in place, they continue to pay the premium.

Reviewing and reconsidering all your insurance every few years is a financially smart practice. Asking competitors for quotes every few years can save you money and help you better understand your policies.

This is especially important after reaching the age of 60, when changing circumstances make it worth reconsidering the types of insurance you no longer need and perhaps new types you should consider. .

If insurance seems overwhelming or too dry to worry about, think about it in terms of saving money. As you approach retirement, the more money you save, the more you have for years of enjoyment.

Why now: Understand your risks and ask yourself if you need these types of insurance

The risks you want to cover with insurance are different when you’re 60 than they were when you were 35 – maybe your kids are grown or your mortgage is paid off, so insurance -life is less important than it was 25 years ago. But now, you may want to address future risks by considering long-term care (LTC) insurance. Even if you’ve held these policies for decades, they may not be appropriate as you age and retire.

Also on MarketWatch: Call it the baby boomer effect: America is aging faster than ever. What does this mean for the country?

Life insurance

When you’re older and have acquired the assets to pay for your funeral and estate details, you may no longer need life insurance, for example. Most life insurance premiums are age-related, so the older you are, the more expensive it is. Many people waste money on life insurance, thinking they are leaving money for their children and forgetting that they have other assets for their heirs.

Life insurance is designed to support your dependent children and spouse when you die. The amount purchased often includes enough to cover any debts you may have. If you have accumulated considerable assets to cover all your family needs, you do not have to maintain life insurance.

As always, there are exceptions. If you have dependents who are young or unable to care for themselves, your policies may be essential to meeting their lifelong needs. Or, if you have a high net worth and want to keep some of your assets intact, such as a business or property, you may want life insurance to cover inheritance tax upon your death.

Either way, seek objective information from your financial planner, lawyer, or accountant to understand how to designate the beneficiary of your life insurance policy to serve your purpose. For example, if you have life insurance to help a disabled child after you leave, you may need to name a special needs trust as the beneficiary.

Disability insurance

Disability is generally a benefit for employees; therefore, coverage comes with your job. Self-employed people or professionals, such as doctors and lawyers, often have their own policies. If you’re contributing to disability insurance, now’s the time to reconsider the details. Most policies only pay to age 62 or 65.

Think about what would happen if you had a disability. Would you be able to opt out of your retirement plans? Do you have a debt to cover? How long could you maintain your disability without touching the social security pension?

If your occupational disability premiums are high, do a cost analysis of what it covers and for how long. Could you cover your disability needs without the policy? Or are the premiums so high at age 61 that the 18 months of coverage you will receive is way too expensive. Even if you choose to keep your policy, be sure to remember to review it every year, especially as you approach retirement.

See also: What you should think about 10 years before retirement

Long Term Care Insurance (LTC)

Do you need care insurance? There is no right answer for everyone, and different professionals have different perspectives. Typically, however, annual LTC premiums are too expensive for those who need them most because they don’t have the assets for annual payments for decades to come.

There is a lot of talk about long-term care as essential for the aging population. Some companies even offer policies as benefits, which you may be able to take with you when you retire if you’re willing to pay for it yourself.

When you are healthy and young, these policies cost less. As you get older, even if you have a policy in place, premiums constantly increase, reducing retirement income. There is so much to know and understand before buying LTC.

First understand if LTC insurance is necessary for your situation. This involves a thorough analysis of your financial and personal situation. Clarify your details by considering the following before making a final decision by reviewing your assets, needs, and goals.

If you decide to purchase this insurance, don’t just shop around for the best price. This product is not only about costs, it is also about benefits. Don’t make it an emotional choice based on aging or pressure selling an insurance agent. Before choosing a policy based on the assumption that you might need home assistance or home care, a little research will help you learn that the Centers for Disease Control indicates that only 7% of older Americans need home help.

Some people in early retirement open an account simply for long-term care needs in the future. By saving without insurance, they feel prepared for whatever comes their way.

Three Basic Coverage Types You Probably Need

The three types of insurance you are likely to want are: home insurance, whether you own or rent; car insurance; and health insurance. They may want to update their coverage and compare their business to others. Finally, they can adjust their deductible to make coverage more financially viable.

Home (or tenant) insurance

No matter where you live, you will need home insurance. Even if you’ve downsized in a condo and you’re told the homeowners association pays for the condo’s insurance, you still need your own insurance. This insurance pays for what is your property inside the condominium, including personal property and appliances as well as liability.

If you decide to rent at an advanced age and have few possessions or furniture, take the time to determine if you have had to replace all your clothes, furniture, kitchen utensils and appliances. These costs add up quickly. Renters insurance can also pay for housing if your residence is uninhabitable due to a hurricane or other disaster.

Car insurance

If you own a car, you will want auto insurance. Now is the time to sit down with your insurance agent and discuss the amount of coverage you need. If you retire or change your work habits, you probably drive less and therefore should pay less. Working from home means many people commute less and drive less overall, which often qualifies for a discount.

For both your home insurance and your car insurance, it’s time to review your premiums and deductibles. If you have accumulated enough assets, increasing your deductible from $250 to $500 or even $1,000 will lower your premium.

However, only make this economical move if you have the resources to cover an insurance claim for the amount of your deductible. By covering more of the damage costs, the insurance company considers that you are less likely to make small claims that cost them money.

See: The Surprisingly Long List of Things Your Car Insurance Won’t Cover

Private health insurance

Certainly, at age 60, you know you need private health insurance unless you qualify for Medicare. Did you know you need health insurance even with Medicare at age 65? There are gaps in coverage and you are responsible for those disbursements.

More: Why it’s getting so hard to find a new doctor and what to do if you end up looking for one

You also need to consider what prescription drugs you take, where you live, and what you can afford if you get sick.

CD Moriarty, CFP, is a Vermont-based speaker, writer, and financial coach. It can be found on MoneyPeace.com.