When planning for retirement, it’s important to consider having different types of insurance to protect your assets and smooth out the costs of unexpected expenses. Because your income is carefully planned per month and per year, it makes sense to add insurance that can match that schedule. Otherwise, a major expense can make a dent in the longevity of your savings.
Here is a short checklist of commonly used insurance products in retirement:
1) Health Insurance
Medicare could be part of this coverage, but it is not free and doesn’t cover everything. So other health insurance can help fill the gaps.
2) Homeowners Insurance
This insurance helps protect your home and personal property from damage or theft. If you experience a rare costly event where something breaks or gets stolen, recovering from the costs it takes to restore your home could be a tall task without insurance to help you pay for it over time.
3) Life Insurance
This insurance helps provide financial security for your loved ones in case of your death. In some cases, you can use the cash value of the life insurance to pay for other expenses, making it a potentially versatile insurance option. It’s important to note that using the cash value will lower the death benefit.
4) Umbrella Insurance
This insurance provides additional liability coverage beyond the limits of other policies and is especially useful for those with a high net worth.
5) Disability Insurance
This insurance provides income in case you become disabled and cannot work and can have high costs if you have to retire early due to becoming disabled.
6) Long-Term Care Insurance
Long-Term Care insurance is considered important in retirement because it is not covered under Medicare. When doing daily activities requires assistance, certain forms of Long-Term Care can be expensive to cover without insurance.
It’s important to review your insurance needs periodically to ensure you have adequate coverage, especially as you approach retirement.
Sources: https://www.investopedia.com/financial-edge/0212/4-types-of-insurance-everyone-needs.aspx, https://www.investopedia.com/terms/h/homeowners-insurance.asp, https://www.investopedia.com/articles/personal-finance/040115/how-umbrella-insurance-works.asp, https://www.investopedia.com/terms/d/disability-insurance.asp