It’s common to think that you don’t need life insurance in retirement.  

It’s likely that your mortgage will be paid off and you will be receiving your pensions.  

Even if you did want life insurance in retirement you may think it’s going to be expensive the older you get.  

But let’s take a step back and break down what life insurance is. A pay out of a lump sum of money on your death.  

Now let’s have a look at a few situations when this pay out might be useful in retirement. 


The times you might still need life insurance in retirement  


You can still apply for life insurance in retirement. There is no set age at which you can’t apply and insurance providers won’t care how much income you have. 

So why might you need life insurance in retirement? 

#1 – You still have debt

Maybe you are still paying off a mortgage in retirement either on your own home or on Buy To Let properties. 

You need to consider how your loved ones would pay these mortgages or any other debt if you were gone.  

Having life insurance can ensure assets like your home or investment properties don’t need to be sold. Or sold quickly for below market value. 

 #2 – Supporting the survivor 

Perhaps you are the main income earner in retirement.  

You might have a larger pension income that is lost or cut in half on your death.  

Your partner may suffer financially without your income.  

Life insurance could pay out a sum to replace the income lost on your death.  

Yes you could be saving or holding back an investment so as to protect this situation occurring in the future but this means you might be missing out on spending more now together. Plus investment values go up and down. There is no guarantee what the investment value will be on your death. An insurance return is guaranteed. 

#3 – Covering Inheritance Tax 

With allowances frozen for the last 12 years and to be frozen for a further 5 years, more and more estates will be subject to Inheritance Tax on death.  

This will be an expensive bill for your children and remember they cannot access your estate until they pay the Inheritance Tax bill! 

Life insurance could be used to cover the Inheritance Tax bill. It would be paid out quickly therefore releasing the value of the estate for the children. 

 #4 – Covering care fees 

Life insurance could be set up in retirement to cover long term care fees of either you, your partner or both.  

For example, you might go into care first meaning a large amount of expense is paid to cover your care. There might not be much left over then for your surviving partner.  

Life insurance could pay out on your death to effectively recover the care costs and put this money back into your estate.  

Also life insurance on your death could then pay out to cover the cost of your partners future care needs which then means there is not such a drain on your estate and therefore more money left over for the kids. This could avoid homes needing to be sold. 

How to apply for life insurance in retirement


You can get life insurance at pretty much any age, it’s just that the older you are the more expensive it will likely be as insurance providers will look at life expectancy.  

Your health condition is also important though. A healthy 70 year old will probably get cheaper life insurance than an unhealthy 65 year old.  

But life insurance in retirement may not cost as much as you think in the grand scheme of things.  

For example, a 65 year old male looking for £100,000 life insurance, covering a 25 year period may pay around £98 per month (prices correct at time of writing). 

If you are interested in sorting out life insurance in retirement then there are a few things you can do to make sure you get the best deal. 

  1. Search the whole of the market – Don’t go for the first deal you see. Life insurance is a competitive market place like anything else so shop around. 
  2. Cheap isn’t always best – Remember the adverts featuring Michael Parkinson and the free pen?! Just because something is cheap or offers freebies doesn’t mean it’s a good deal. With life insurance, it’s crucial you check the terms and payout statistics of the provider.  
  3. Make sure you get the right cover for what you need – I have talked generally about life insurance in this article but there are actually quite a few different types of life insurance that could all offer something different depending on what you are trying to achieve. Therefore it’s best to get professional advice. 
  4. Use Trusts – Setting up a trust alongside your life insurance is usually crucial as otherwise the money gets paid out to your estate and is included in Inheritance Tax calculations and can’t be released until Inheritance Tax is paid! 
  5. Make your family aware of your cover – Make sure your family know about the protection you have put in place and what they need to do on your death. You can write it all down and store it with your Will or better still use a service like Keylu where everything is stored digitally and you can even leave video messages. 


From our research findings we have found that paying for life insurance and your family receiving a guaranteed lump sum on your death can be the equivalent of investing and earning a 5% return each year. 

And of course if you still have life insurance in place that you set up years ago it might be a really good idea to keep this in place and consider it for one of the reasons listed earlier. It’s likely to be cheaper than any new deal you could get now. 

If you would like to discuss options for ensuring the protection of your wealth so your loved ones are looked after rather than the tax man then please schedule a no obligation free 15-minute call 

Risk warning:

Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.