Insurance Needs in Retirement

Posted by Busey Bank on Apr 10, 2023 9:53:00 AM
Busey Bank

As you prepare for retirement, your goals and priorities will likely change. Along with them, your insurance needs may also need to be re-evaluated—which is why retirement is a good time to review the different aspects of your insurance coverage and make any necessary changes.

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Stay well with good health insurance

After retirement, you'll likely focus more on your health than ever before—which may require more visits to the doctor for preventive tests or routine checkups. There's also a chance that your health will decline as you grow older, increasing your need for costly prescription drugs and medical treatments. All of this can add up to substantial medical bills, which can be difficult to pay once you no longer have health benefits through your employer. As a new retiree, you will need health insurance that meets both your needs and your budget.

Fortunately, one typically becomes eligible for Medicare coverage at age 65. You shouldn’t expect Medicare to cover all of your needs. To supplement Medicare, you may want to purchase a Medigap policy, which is specifically designed to fill the holes in Medicare's coverage. Though Medigap policies are sold by private insurance companies, they must follow federal and state laws. Generally, each of the 10 standard Medigap plans provides certain core benefits, and all but one offers a combination of additional benefits. Be sure to look at both cost and benefits when choosing the right plan for you.

If you're retiring early and won't be eligible for Medicare for a number of years, your employer may give you a retirement package that includes health benefits at least until Medicare kicks in. If not, you may be able to continue your employer's coverage at your own expense through COBRA. This is only a short-term solution, as COBRA coverage typically lasts only 18 months. Another option is to buy an individual policy. You can shop for health insurance through a state or federal health insurance Marketplace, where you can compare the cost and benefits of each plan.

Don't overlook long-term care insurance

If you're able to stay healthy and active throughout your life, you may never need to enter a nursing home or receive at-home care. However, many people will require some type of long-term care during their lives, which can get pretty expensive. In case you do need long-term care at some point, it’s best to be prepared. Unfortunately, Medicare provides very limited coverage for long-term care. Even a good private health insurance policy will not offer much coverage for long-term care, but most long-term care insurance (LTCI) policies will.

LTCI is sold by private insurance companies and typically covers skilled, intermediate and custodial care in a nursing home. Most policies also cover home care services and care in a community-based setting (i.e., an assisted-living facility). This type of insurance can be a cost-effective way to protect yourself against long-term care costs. The key is to buy a policy when you're still relatively young—if you wait until you're older or ill, LTCI may be unavailable or much more expensive.

Weigh your need for life insurance

Your life insurance needs may change during retirement. When you're working and raising a family, the loss of your job income could be devastating. You often need life insurance to replace that income, meet your outstanding debts (i.e.., your mortgage, car loans or credit cards) or fund your child’s college education in case something happens to you. After you retire, there's usually no significant job income to protect. Additionally, your children may be grown and most of your debts paid off. If you’re fortunate enough, you may even be able to provide for your loved ones without insurance.

It may make sense to go without life insurance in these circumstances, especially if you have term life insurance and your premium has increased dramatically. But what if you still have financial obligations and few assets of your own, or what if you're looking for a way to pay your estate tax bill? In this case, it might make sense to keep your coverage or purchase it if you have none. If you still need life insurance but not as much as you have now, you can always lower your coverage amount. Before making any decisions, it’s best to consult with a professional who can help you weigh your needs against the cost of coverage.

Take a look at your auto and homeowner’s policies

If you stay in your home after you retire, your homeowner’s insurance needs may not change much. You should still review your liability coverage to make sure it's sufficient to protect your assets. If you're liable for an accident that occurs on your property, claims against you for medical bills and other expenses can be substantial. For additional protection, you should consider buying an umbrella liability policy. Retirement is also a good time to review the coverage you have on your home itself and the property inside it.

Additionally, retirement is a good time to review your auto insurance policy to make sure your coverage limits are high enough in each area. Again, having the right amount of liability coverage is especially important—you don't want your assets to be put at risk if you cause an auto accident that injures other people or damages property. Now that you’re retired, you should also explore ways to save on your premium, such as taking senior driving courses or seeking potential discounts for low annual mileage.

Ask for help

The Busey Wealth Management team can help you decide which type of coverage is right for you and your family, and also help you manage your coverage as your financial situation evolves. To learn more about the comprehensive services offered by Busey Wealth Management, visit


This is not intended to provide legal, tax or accounting advice. Any statement contained in this communication concerning U.S. tax matters is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties imposed on the relevant taxpayer. Clients should obtain their own independent tax advice based on their particular circumstances.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.

This presentation is for general information purposes only. It does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific client.

Investment products and services through Busey Wealth Management are:
Not FDIC INSURED | May lose value | No bank guarantee

Topics: Wealth, Retirement Planning

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