As you near retirement, take a look at your insurance. There may be some policies you no longer need, and others that can help you feel more secure in your golden years.
Health insurance
Anyone enrolled in Social Security can sign up for Medicare when he or she turns 65. Medicare helps you pay hospital bills (Medicare Part A) and doctor bills (Medicare Part B).1 Also, you can sign up for Medicare Part D to help you cover the expenses of prescription drugs.
When you turn 65, there are some things to think about, including:
- If you continue working after age 65, you can still receive coverage through your employer-sponsored plan and you may not need your Medicare coverage.1
- If you are retired and no longer have group coverage, you may want to purchase an additional policy to help supplement your basic Medicare coverage. These policies are called Medicare Supplemental or Medigap policies. These policies are sold through private insurers, but are standardized so that they’re easier to compare. There are 12 different types of Medigap policies (Medigap Plans A-L). To find out more, go to http://www.medicare.gov/medigap/default.asp, or talk to an insurance advisor.
Life insurance
If you don’t already have life insurance, buying it when you’re near retirement age can be difficult. You may not qualify for life insurance if you’re not in good health. However, it is possible to purchase a life insurance policy later in life—but be prepared to pay more than you might have expected to pay.
If you already have a life insurance policy, you may want to think about the following:
- If you have a term life insurance policy, you may want to convert it to a permanent policy. Permanent life insurance policies accrue cash value from which you can withdraw or borrow for the rest of your life. Find out if your policy is convertible, and if your premium will be increased if you convert it to a permanent policy.
- While some people let their term life insurance lapse when their children are grown, you may want to keep a life insurance policy if you’re supporting other dependents, like a spouse, parents, adult disabled children, or others who depend on you financially.
- Talk to your financial advisor to see how life insurance fits into the rest of your financial picture.
Long-term disability insurance
Many LTD polices terminate at retirement or will terminate at a predetermined age as specified in the policy. However, once you reach your Social Security retirement age (which is based on your year of birth), Social Security kicks in and your financial situation may not be as precarious if you become disabled and are no longer able to work. At this point in your life, you may choose to drop your LTD coverage, and purchase a long-term care policy instead.
1. Insurance Information Institute website, Life Stages / Senior Years page at http://www.iii.org/services/life_stages/senior.htm, updated 2010. Accessed April 7, 2010.
