Do I Need Life Insurance After I Retire?

Reaching retirement is a significant milestone. You’re not working and if you have kids, they’re probably no longer dependent on you, so do you still need life insurance?

Life insurance and retirement planning often go hand-in-hand, and the need for cover can change over time. If you’re wondering whether to keep your policy or let it go, you’re not alone.

Here, we’ll look at when it can still be valuable to hold a policy, and how to decide what’s right for your stage of life.

Why life insurance might still be useful after retirement

Here are some reasons why keeping your cover after you’ve retired could be a smart move:

Debt coverage

Many Australians enter retirement still carrying significant debts, such as mortgages or personal loans. As of 2025, over 40% of Australians are retiring with more debt than their superannuation could cover.

If you’re still juggling mortgage repayments or other substantial loans, Life insurance provides a financial safety net so that outstanding debts don’t become a burden for your loved ones. Should anything happen to you, your policy could help pay off what you owe.

Support for a dependent spouse, children or grandchildren

Many households rely on shared retirement income or pension benefits. If your passing would leave your partner short on income, life insurance creates a crucial financial buffer during an already difficult time.

Life insurance coverage becomes even more important if you have a child with special needs or other dependants who depend on your financial support. Your policy ensures they’ll continue receiving the care they need, giving you valuable peace of mind.

Estate planning

Life insurance can be a simple and tax-effective way to pass on wealth to your loved ones. It means that your beneficiaries will receive a lump sum quickly, which can help with probate costs and equalise inheritance between family members.

Planning to leave your holiday home to one child and your investment portfolio to another? Life insurance can help balance these inheritances, so everyone receives their fair share.

Funeral and final expenses

None of us likes thinking about funeral costs, but ceremonies are a significant expense, running between approximately $4,000 and $15,000. With life insurance, you can dedicate funds to cover these costs as well as any healthcare bills or end-of-life expenses.

Having this financial cushion means your family won’t face difficult financial decisions while they’re grieving – a final gift that can’t be underestimated.

Other financial gaps

Keeping your life insurance after retirement can help fill obvious financial gaps, including:

• Providing funds to offset tax implications for your beneficiaries
• Creating liquidity for smooth business succession if you’re still involved in a family business
• Establishing education funds for grandchildren or helping family members achieve important milestones

When you might not need it anymore 

While life insurance in retirement can give you peace of mind, there are situations where cover might no longer be necessary. Here’s when it might make sense to let your policy go:

You’re debt-free

Paid off the mortgage and cleared your credit cards? With no loans to repay, your estate won’t be left to deal with lingering bills.

But even if you’re debt-free, your beneficiaries might not be. A life insurance payout could help your loved ones cover their own mortgages or other financial commitments. It can ease their financial burden during a difficult time and provide them with added security as they adjust to life without you.

Your partner is financially independent

If your spouse or partner has their own superannuation, savings or pension, they may not need the financial safety net that life insurance provides. When your passing wouldn’t dramatically change their financial situation or lifestyle, continuing to hold life insurance after retirement might not be as necessary.

However, even a financially independent partner may face new costs after your passing – from downsizing the family home to covering aged care on a single income. Life insurance can offer an extra buffer, especially if you want them to maintain their current standard of living.

You’ve accumulated enough assets to self-insure

Some retirees have built up enough savings, superannuation, or investments to cover final expenses and ongoing needs. The Association of Superannuation Funds of Australia suggests a comfortable retirement requires around $640,000 in super for a couple. If your assets significantly exceed this figure, you might already have enough to “self-insure” against the financial impact of your passing.

However, even with substantial assets, life insurance can still play a valuable role. A policy can provide quick access to funds for your beneficiaries, which can be especially helpful while your estate is being settled. It can also help preserve your assets for long-term goals, like passing on an inheritance or supporting a charity.

You don’t need to leave an inheritance

Not everyone prioritises leaving behind a substantial inheritance. Many Australians are now taking a different approach to inheritance and helping their children or other loved ones financially during their lifetime. That said, it’s still worth considering whether a small policy could ease the burden of funeral costs or final bills. Even a small level of cover can provide peace of mind and prevent loved ones from dipping into their own savings.

How to assess your life insurance needs in retirement

Unsure whether keeping a policy still makes sense for you? Here’s how to evaluate if you need life insurance for retirement:

Review your financial obligations

Begin by listing your current financial responsibilities:

• How much is left on your mortgage?
• Do you have other loans or credit card balances?
• Are there ongoing expenses you currently cover for your family?
• What potential healthcare costs might you face?

Include any funeral expenses your loved ones may have to account for, and their ongoing living costs. This financial snapshot helps to show whether they could cover these obligations if you were no longer around.

Evaluate beneficiaries’ needs

When you’re deciding whether to maintain your current life insurance after retirement, consider:

• Would your partner’s lifestyle need to change dramatically without your income?
• Do you have family members who depend on your financial support?
• Are there specific goals you want to help your beneficiaries achieve?

Understanding the real-world impact of your absence will help you to decide whether life insurance is a valuable part of your financial protection strategy.

Consider policy value and premiums

How much life insurance you need typically decreases as you age, so the coverage amount you needed at 45 might be excessive at 65. Rather than cancelling your life insurance policy, you could take the middle-path and reduce your cover. It’s a straightforward process and can significantly lower your premiums while keeping you protected. Contact your insurer and they can take you through this process.

Consider professional advice

Retirement finances can be complex. Life insurance decisions affect tax planning, estate considerations and overall financial security. Consider consulting a financial adviser who specialises in retirement planning or speak to our team at NobleOak. We’re here to listen and talk you through options for your situation. Call us for a chat on 1300 041 494.

So, should you keep life insurance after retirement?

There’s no universal answer to whether you need life insurance in retirement – it depends on your personal circumstances, financial obligations, and goals for your loved ones.

For many seniors, the sweet spot isn’t cancelling coverage entirely but rather right-sizing it to match their current needs. This balanced approach frees up funds for you to enjoy your retirement and gives you important protection.

Remember that your situation will continue evolving even during retirement. Make reviews of your insurance a regular part of your ongoing financial management. What makes sense today might need adjustment in five years.

This is general information only and does not take into consideration your individual circumstances, objectives, financial situation, or needs.

Award-winning life insurance

NobleOak offers award-winning life insurance that can be tailored to your changing needs as you move through retirement. Not sure how much coverage makes sense for your situation? Our Life insurance Calculator helps you determine the right level of protection based on your specific circumstances.

Ready to explore your options or adjust your existing coverage? Get a quote today and discover how NobleOak’s flexible life insurance solutions can support you in retirement.

Any financial product advice is general in nature only and does not take into account your individual circumstances, objectives, financial situation, or needs. Before acting on it, please consider the appropriateness of the information, having regard to those factors. Any third party websites or tools referred to are subject to their own terms and conditions and NobleOak Life Limited makes no representation or warranty as to any information on those websites. Persons deciding whether to acquire or continue to hold life insurance issued by NobleOak Life Limited should consider the relevant Product Disclosure Statement and Target Market Determination for the product. NobleOak Life Limited ABN 85 087 648 708 AFSL 247302.