Life insurance in later years — what still makes sense
This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.
Your parent probably bought life insurance decades ago when you were young and they needed to protect the family if something happened to them. It made perfect sense then. Now you're an adult, your parent is retired, and you're wondering if that old policy is still there, what it's worth, and whether they even need it anymore. Or maybe they don't have any life insurance at all, and you're not sure whether getting some at this stage of life would be smart or wasteful.
This is one of those financial conversations where conventional wisdom breaks down. You hear people say you don't need life insurance once you're retired, and that might be true. But it also might not be. The answer depends on your parent's specific situation, and understanding what life insurance can and can't do in your parent's later years helps you figure out what actually makes sense.
The confusion happens because life insurance serves different purposes at different times in life. When you're young with young children and a mortgage, you need insurance to replace your income if you die. Your parent's situation is completely different. They probably aren't earning a paycheck that needs replacing. So the question becomes: what would life insurance actually pay for at this point?
That question doesn't have a one-size-fits-all answer, which is probably why your parent's situation still feels murky. Let's clear it up.
Understanding the Basics
Life insurance comes in two main flavors: term life (which covers you for a set period, like twenty or thirty years) and permanent life (whole life or universal life, which can last your whole life as long as you keep paying the premiums). When people talk about life insurance in later years, both types might still be relevant, but for very different reasons.
Your parent might have an old term life policy from thirty years ago. If that policy is still in force (meaning they've kept paying the premiums), it's still providing protection. The death benefit pays out tax-free to whoever is listed as the beneficiary. But here's the key thing: if it's a thirty-year term policy, it's probably expiring or expired already. Once a term policy ends, the protection is gone. Your parent can apply for a new policy, but as they've gotten older, the premiums would be much higher. At some point, buying new term insurance in later years becomes very expensive or even unavailable, depending on your parent's health.
Some parents have permanent insurance, like whole life policies. These can stay in force for their whole life, but they require ongoing premium payments. Here's where it gets more complicated. A whole life policy builds a cash value component. Your parent pays premiums into the policy, and part of those premiums goes into a cash value account that grows over time. Your parent can borrow against that cash value, or they can surrender the policy and get that money. This makes permanent policies relevant later in life in a way term policies sometimes aren't.
So what actually makes sense to keep, and what makes sense to drop? The answer starts with understanding what your parent needs the insurance to do. If your parent has substantial debts (like a mortgage or significant credit card debt) that would become your family's problem to deal with after they pass, insurance could pay that off. If your parent has savings they want to protect and pass on to their kids, but they're worried about taxes or final expenses eating into it, insurance could protect that inheritance. If your parent wants to make sure their funeral is paid for without burdening the family, insurance could do that. If your parent has no debts, no dependents who rely on them financially, and enough money set aside to cover their final expenses, they might not need insurance at all.
Here's something important that confuses a lot of adult children: keeping an old policy "just in case" isn't usually the right strategy. Once you decide what a policy should do, you can figure out if you actually need it. If you don't need it, keeping it for sentimental reasons or vague reassurance just means money is going out the door every month for a benefit you don't actually require.
The other thing to understand is that permanent policies require ongoing action. If your parent has a whole life policy and stops paying the premiums, the policy lapses. The cash value might cover some premiums for a while (called automatic premium loan), but eventually, if premiums aren't paid, the policy dies. So keeping a permanent policy isn't passive. Someone has to keep paying it.
Your Parent's Specific Situation
Start by finding out what policies your parent actually has. If they've been paying insurance premiums, there should be statements. Look for life insurance statements among their financial paperwork. Call their insurance agent if they have one. Many people are surprised to find policies they completely forgot about, or conversely, they think they have life insurance when they actually let a policy lapse years ago.
Once you find the policies, you need to understand what you're looking at. For each policy, find out: What is the type of policy (term, whole life, variable life, universal life)? What is the death benefit (the amount that would be paid out)? How much are the premiums, and how often do they get paid? For term policies, when does the term end? For permanent policies, what is the cash value right now? Who is listed as the beneficiary?
That last question matters. The beneficiary is who gets the money if your parent dies. You might assume it's you or your siblings, but depending on when your parent bought the policy, the beneficiary might be an ex-spouse, the policy might be listed to their estate, or it might go to someone else entirely. The policy document will have this information. If your parent wants to change the beneficiary, that's a simple form with the insurance company.
Ask your parent what they're trying to accomplish. Are they worried about final expenses? Are they trying to leave money for their grandchildren? Are they concerned about paying off a mortgage or other debt? Are they trying to replace income they're no longer earning (which doesn't apply if they're retired, but sometimes people still think in these terms)? What's the actual goal? Once you know the goal, you can figure out if insurance is the right tool.
Find out your parent's health situation. If they have serious health conditions, getting new insurance would be extremely expensive or impossible. This matters because it affects whether keeping an old policy (even if you're not sure you need it) might be better than dropping it and then wanting to reapply later. If your parent is in declining health, reviewing the policies they have becomes more urgent because the options for making changes become limited.
Talk to your parent about money more generally. Do they have liquid savings? How much? Is there a mortgage? Do they have other debts? What are they hoping to leave behind? This conversation is uncomfortable, but it's necessary. You can't figure out whether life insurance makes sense without understanding the broader financial picture. Someone in their seventies with half a million in savings and no debts has very different insurance needs than someone in their seventies with three thousand in savings and a hundred thousand dollar mortgage.
The documentation you'll need includes copies of any existing life insurance policies (the full policy documents if possible, not just the premium statements), information about any debts (mortgages, loans, credit card debt), the details of any liquid savings and retirement accounts, and a clear statement of what your parent wants to happen to their assets after they die.
Taking Next Steps
The first decision is whether to keep, drop, or modify existing policies. If your parent has a term life policy and the term is ending, renewal options are usually limited and expensive. In this case, you're looking at either converting the policy (if the insurance company allows it) to permanent insurance, or dropping it. If a term policy is close to expiration and your parent doesn't need coverage, letting it lapse is fine. If they do still want coverage and renewal is unaffordable, talk to an insurance agent about alternatives.
If your parent has a permanent policy with significant cash value, the situation is different. If they're still paying premiums and they're concerned about affording them, they might be able to take a distribution of the cash value or use the cash value to pay future premiums. If they want to keep the policy but are struggling with costs, these options should be explored before dropping a policy they've paid into for decades.
Some people in later life choose to reduce the death benefit on their policies rather than drop them entirely. For example, if your parent has a whole life policy with a two hundred thousand dollar death benefit and they're paying premiums that feel like a burden, they might reduce the benefit to one hundred thousand dollars. This lowers the premiums while keeping some protection in place. This might make sense if the original policy had good guaranteed terms and new insurance would be much more expensive.
Another option for some people is selling a life insurance policy through what's called a "life settlement." If your parent has a permanent life policy with a large death benefit, a company might offer to buy it for a percentage of the benefit amount. This gives your parent cash now instead of letting the policy expire, though it means you won't have the insurance protection later. This is only worthwhile if the cash offered is meaningful and your parent doesn't actually need the life insurance for anything.
If your parent doesn't have insurance and you're wondering whether to buy some, the first question is what it would be for. As mentioned, the common reasons in later life are final expenses, paying off specific debts, or leaving money for your family. If final expenses are the concern, a smaller burial insurance policy (covered in another article) is usually a better fit than a large life insurance policy. If debt payoff is the goal, the amount of insurance needed is the debt amount, not something much larger. If your parent is healthy enough to qualify, getting a smaller policy targeted at the actual need makes more sense than trying to apply for large traditional life insurance.
The catch is that insurance gets more expensive with age. Your parent might have been offered a free life insurance benefit as part of their employer retirement plan, or some employers offer supplemental life insurance to current or retired employees. If these options exist, they should be explored first because employer insurance is often available without underwriting or is offered on a guaranteed basis. If your parent can't access employer insurance, shopping around with term quotes and burial policy quotes from multiple companies makes sense.
Here's a practical reality: many people in later life discover they have older life insurance policies they forgot about. Before doing anything else, finding these policies and understanding what they are often solves the problem. You might already have coverage that your parent either forgot about or didn't realize was still active. In that case, the decision becomes whether to keep it or stop paying for it, which is much simpler than shopping for new insurance.
Meet with a financial advisor or insurance professional to review the complete picture. Your parent's life insurance decisions can't be separated from their overall estate plan, their tax situation, and their financial goals. A professional can help make sure the insurance strategy aligns with everything else.
One last practical note: if your parent does keep or buy life insurance, make sure the beneficiary designation is current and clear. Some people discover too late that their beneficiary is an ex-spouse, or an ex-business partner, or someone who isn't who they intended. Double-check this. Changing a beneficiary is a simple form, and getting it right now prevents big problems later. Also, let your family know that a policy exists and where the documents are kept. After your parent passes, the insurance company won't know to pay the death benefit unless the beneficiary or an executor claims it.
Life insurance in later years isn't about following some rule that you always need it or never need it. It's about having a clear reason it exists and making sure it's actually serving that purpose. Your parent might need it, might have too much of it, or might not need any at all. The answer depends on their specific financial situation, their goals, and their health. Taking time to figure out what makes sense for them—rather than keeping or buying insurance on autopilot—saves money and gives your whole family clarity.
How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's cognitive health or safety, consult with their healthcare provider or contact your local Area Agency on Aging for guidance and support.