A retired woman laughs as she sits with friends and discusses what types of insurance she should have in retirement.

What Insurance Do You Need for Retirement?


A portion of retirement planning should include what types of insurance coverage you'll need. Here are popular insurance plans for retirees to explore.

As you approach retirement, your financial and health needs change—and as a result, your insurance needs do too. You may want to supplement your Medicare with additional health insurance, add or increase your dental insurance, or even consider travel insurance. On the flip side, you may wonder whether you need to keep your term life insurance policy.

The right insurance mix for retirees depends on their individual circumstances. However, all pre-retirees should have a good sense of the types of insurance they may want once they enter this next life stage. The answers will impact their expenses and inform their overall retirement budget.

Here are several insurance products to consider adding or keeping as you plan for your retirement costs:

Supplemental Health Insurance

Once you turn 65 you become eligible for Medicare. However, many experts recommend that retirees also purchase some form of supplemental insurance to back up their Medicare coverage. Medicare has deductibles, co-pays, and importantly, no maximums for out-of-pocket spending. That means a big medical event such as surgery or lengthy hospital stay could end up costing thousands of dollars—even after Medicare has paid its part of the bill.

In the typical setup, Part A of Medicare covers hospital costs and is free to most older Americans. You can purchase Part B to cover primary care and other outpatient benefits. You can also purchase Advantage plans or other supplemental insurance, which provide additional coverage, and often vision and dental insurance in the process. The bottom line: spend some time learning about the benefits of Medicare as well as some of its gaps. Then explore insurance options that offer you the appropriate amount of coverage and protection.

Dental and Vision Insurance

Depending on whether you choose supplemental health insurance and what type you select, you may also want to consider dental and vision insurance. Regular dental and eye care are important for maintaining overall health. For instance, there’s a strong connection between gum disease and cardiac trouble. And if you choose Medicare A and B, you may also need an additional dental and vision policy.

Long-Term Care Insurance

If you don’t already have long-term care insurance, consider adding it to your quiver of protective policies. If you do already carry it, maintaining it through your retirement is a smart idea. The cost of long-term care can quickly eat into your retirement nest egg, depleting assets you may have allotted for other expenses or taxing the resources of your other family members.

Medicaid will cover your expenses for qualified assisted living and nursing home facilities, but only after you’ve exhausted your financial resources. Insurance helps cover the cost of care, ensuring that you’re able to pay for the type of care you’d like.

A few things to keep in mind: The rates increase with age, so purchasing long-term care insurance in your 50s or at least prior to retirement is most cost-effective. Be sure to research your options, considering the credibility of the insurance company, the cost of the premium, and whether the coverage provided meets your anticipated needs.

Auto and Property Insurance

If you plan to continue driving your cars and owning your home, then auto and homeowner’s insurance should be part of your retirement budget. And if you aim to purchase a second home—perhaps in a warmer location—consider the cost of insurance into your overall expenses.

On the auto insurance front, the good news is this an area where you can likely save money. Retired drivers tend to drive less, and they’re also considered low risk, which bodes well for discounts and premium reductions. For instance, you may be eligible for mature driver discounts or low mileage discounts.

Travel Insurance

If your vision for your golden years includes a lot of travel, then travel insurance can really pay off. These products cover potential risks such as trip cancellations and lost luggage. More importantly, they also cover medical expenses incurred overseas, evacuations, and may even provide emergency assistance and advice to travelers needing guidance. You typically purchase insurance by the trip, and it averages 4% to 10% of the trip’s total cost. So be sure to factor in the expense of insurance as you plan your trips each year.

Life Insurance

As noted, there are multiple insurance products that you may need during retirement, but are there any that you should give up? For some retirees, term life insurance may fall into this category. In your working years, you typically purchase term life insurance to ensure your partner and children can cover their expected expenses if you suddenly passed away. In fact, metrics to determine how much life insurance you should purchase often include a multiple of your annual earnings (plus anticipated related savings such as retirement and college savings contributions).

If you have enough saved that your partner would be able to cover his or her retirement expenses in the event of your death, then you may no longer need your term life insurance policy. However, if your passing would leave your partner or children in financial straits, then continuing to fund a term policy makes sense.

Retirement is not only a personal and career transition but a financial one as well. Explore the products that will protect your assets and your health, and you'll ensure that you have the right safety nets in place as you embark on your next act.

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