Life insurance in later years — what still makes sense

Reviewed by the How To Help Your Elders Team | Updated March 2026

Your parent's life insurance was bought when you were small, the mortgage was big, and the whole point was protecting the family if something terrible happened. Now the kids are grown, the paycheck is gone, and the old policy sits in a drawer somewhere collecting dust. Whether that policy still earns its keep, or whether your parent needs coverage at all at this stage, depends entirely on what the insurance is supposed to do now that the original reason no longer applies. The answers are clearer than most people expect once you ask the right questions.

Most retirees do not need life insurance, but some absolutely do

The blanket advice that nobody needs life insurance after retirement is wrong about as often as it is right. If your parent has no debts, no dependents relying on their income, and enough savings to cover final expenses, dropping or letting a policy lapse is perfectly reasonable. Paying premiums for a benefit nobody actually needs is just money going out the door.

Where life insurance still makes sense is narrower than it used to be. If your parent carries a mortgage or meaningful debt that would land on the family after death, insurance can pay it off. If they want to guarantee funeral and burial costs are covered without burdening anyone, a smaller policy or burial insurance handles that. If there is a surviving spouse who depends on your parent's pension or Social Security income that disappears at death, insurance replaces that lost income. According to the National Association of Insurance Commissioners, final expense policies with benefit amounts between $5,000 and $25,000 remain the most commonly purchased life insurance products for adults over 65.

The confusion usually comes from treating life insurance as something you either always need or never need. It is a tool. The question is whether your parent has a job for that tool to do.

Term versus permanent: what your parent probably has

Life insurance comes in two basic forms. Term life covers a set period, usually twenty or thirty years, and then it expires. Permanent life (whole life or universal life) can last a lifetime as long as premiums keep getting paid, and it builds a cash value component over the years.

If your parent bought a thirty-year term policy back when you were a kid, it has likely expired or is about to. Once a term policy ends, the protection is gone. Your parent can apply for new term coverage, but premiums at 70 or 75 are dramatically higher, and health conditions may make it impossible to qualify. The American Council of Life Insurers reports that term policy renewal rates for adults over 70 can be four to eight times higher than the original premium, which makes renewal impractical for most families.

Permanent policies are a different conversation. A whole life policy builds cash value over time. Your parent can borrow against that value, use it to pay future premiums when cash is tight, or surrender the policy and take the money. This makes permanent insurance a financial asset in a way that term insurance is not. But permanent policies require ongoing premiums. If those payments stop, the cash value gets eaten through to cover the gap, and eventually the policy lapses. Keeping a permanent policy is not passive. Someone has to keep paying.

Finding out what your parent actually has

Start with the paperwork. Look for life insurance statements among your parent's financial documents. Call their insurance agent if they have one. The NAIC estimates that roughly $7.4 billion in life insurance benefits go unclaimed in the United States because beneficiaries do not know a policy exists. People forget about policies they bought decades ago, or they assume a policy lapsed when it is actually still active.

For each policy you find, you need to know what type it is (term, whole life, universal life), what the death benefit amount is, how much the premiums cost and how often they are paid, when a term policy expires, what the current cash value is for permanent policies, and who is listed as beneficiary. That last one matters more than people realize. Beneficiary designations sometimes list an ex-spouse, a deceased person, or someone your parent no longer intends. Changing a beneficiary is a simple form with the insurance company, and getting it right now prevents real problems later.

Deciding what to keep, change, or drop

Once you know what policies exist, the decision becomes practical. If a term policy is expiring and your parent does not need coverage, letting it lapse is fine. If they still want protection and renewal is too expensive, ask the insurance company about converting to a smaller permanent policy, which some policies allow without a new health exam.

If your parent has a permanent policy with meaningful cash value and the premiums feel like a burden, they have options before dropping the policy entirely. They can reduce the death benefit, which lowers premiums while keeping some coverage in place. They can use accumulated cash value to pay premiums for a while. They can take a cash-value distribution if they need the money more than the coverage.

Another option is a life settlement, where a company buys the policy for a percentage of the death benefit. According to the Life Insurance Settlement Association, settlement payouts average about four times the cash surrender value of the policy, though they are still a fraction of the full death benefit. This makes sense only if the cash offered is meaningful and your parent does not actually need the insurance for anything.

If your parent has no insurance and wants some, the first question is what it would cover. For final expenses, a smaller burial insurance policy (typically $5,000 to $25,000) is usually the right fit rather than a large traditional policy. Premiums for guaranteed-issue burial policies for someone in their 70s typically run $50 to $150 per month depending on the benefit amount. If your parent had employer-provided life insurance benefits during their career, check whether any supplemental coverage carried into retirement, because employer plans sometimes offer coverage without medical underwriting.

The bigger picture matters

Life insurance decisions cannot be separated from your parent's overall financial situation. Someone in their seventies with substantial savings, no debts, and a surviving spouse with their own income has a completely different insurance need than someone in their seventies with $3,000 in savings and a mortgage. Talk to your parent about money broadly. What debts exist, what savings they have, what they hope to leave behind. This conversation is uncomfortable, but it is necessary. You cannot figure out whether life insurance makes sense without understanding the whole financial picture.

A financial advisor or insurance professional can review everything together and make sure any insurance decisions align with your parent's estate plan, tax situation, and goals. This is worth doing before making changes to policies that have been in force for decades.

One last practical thing: if your parent keeps or buys life insurance, make sure the family knows the policy exists and where the documents are kept. The insurance company will not pay the death benefit unless the beneficiary or an executor files a claim. Policies that nobody knows about become part of that $7.4 billion in unclaimed benefits.

Life insurance in later years is not about following a rule that you always need it or never need it. It is about having a clear reason for it and making sure it is actually doing that job. Taking time to figure out what makes sense for your parent, rather than keeping or buying coverage on autopilot, saves money and gives the whole family clarity about what happens next.

Frequently Asked Questions

Does my parent need life insurance if they are retired with no debt?
Probably not. If there are no debts that would fall on the family, no dependents relying on their income, and enough savings to cover funeral costs, the main reasons for life insurance no longer apply. Paying premiums for a benefit nobody needs is money that could be used elsewhere.

What happens to a whole life policy's cash value if my parent stops paying premiums?
The policy uses its accumulated cash value to cover the premiums automatically. This can keep the policy alive for months or even years depending on how much cash value has built up. Once the cash value is exhausted, the policy lapses and the coverage ends. Your parent can also choose to surrender the policy and receive the cash value as a payout instead.

Can my parent get new life insurance in their 70s or 80s?
It depends on their health. Guaranteed-issue policies (which do not require a medical exam) are available but tend to have smaller benefit amounts and higher premiums. Traditional underwritten policies may be available if your parent is in good health, but premiums at this age are significantly more expensive. The NAIC notes that premiums for new policies issued to adults over 75 are among the highest in the industry.

Should we keep an old policy "just in case"?
Only if you can identify a specific purpose the policy serves. Keeping insurance for vague reassurance means paying premiums every month for a benefit that may not be needed. Figure out what the policy would actually pay for. If you cannot name a concrete use, the money is better spent elsewhere or saved.

What is a life settlement and is it worth considering?
A life settlement is when a third-party company buys your parent's life insurance policy for a lump sum. The buyer takes over premium payments and collects the death benefit when your parent dies. Settlements typically pay more than surrendering the policy for its cash value but less than the full death benefit. This can make sense if your parent no longer needs the coverage and could use the cash, but it means giving up the death benefit entirely.

How do I find out if my parent has a forgotten life insurance policy?
Check their financial paperwork for premium statements or policy documents. Contact their current or former insurance agent. Search the National Association of Insurance Commissioners' Life Insurance Policy Locator at no cost. You can also check old tax returns for any interest income reported from a cash-value policy, which can point you to the issuing company.