Insurance Needs for Empty Nesters

Published by Bob Gustafson

Insurance Needs for Empty Nesters

Once the kids are out of the house (and it’s just you and your spouse), how do your insurance needs change now that you are empty nesters? Read below as we discuss the various policies and how your coverage may need to adjust. 

Life Insurance

Let’s start with life insurance. When you’re younger, you generally need more life insurance. Why? Your income is usually lower. Debts are typically higher i.e., mortgage, car payments, etc. There are obligations looming in the future requiring significant amounts of money i.e., children’s education, planning for retirement. However, over time, the need for life insurance decreases. This is especially true when you don’t have dependent children relying on you for financial support. At this point, you should reevaluate your life insurance policy. Take a look at whether the amount you have still meets your needs. It may be that you want to decrease the amount due to the reasons outlined above. 

Long Term Care Insurance

The next coverage you should consider is long term care insurance, which is a policy for assisted living or in-home nursing care. While beneficial to have, this type of insurance is expensive. Therefore, it’s important to investigate. Evaluate the policy and decide whether it’s worth it for your personal situation to protect assets and quality of life in the long run.

Health Insurance

If you were able to retire prior to age 65 when Medicare coverage is set to begin, you will need health insurance coverage to ensure you are covered until you can fully qualify for Medicare. If your spouse has health benefits through their employer, you may be able to get added to their plan. However, you may need to wait until the employer’s annual enrollment period.

Once you turn 65, be sure to sign up for Medicare on time (within 3 months of your 65th birthday). Once enrolled, you can then add various plans often referred to as Medicare Supplement plans to cover care not provided by Medicare itself.

Liability Coverage

Homeowner’s/Car Insurance Policies

It’s always a good idea to review your homeowner’s and car insurance policies every now and then. Generally, as you grow older, your net worth grows. Because we live in a litigious society, it’s important to evaluate your liability protection. For example, if you cause a car accident with injury and the other party sues you, it’s important you have coverage that will protect your assets. 

Umbrella Policy

Additionally, if your net worth is significantly high, you may want to consider looking into an umbrella liability policy. This is a special type of insurance that is designed to cover you above the liability limits of your home and auto. Not only is this coverage beneficial because it sufficiently protects you, but it also protects the injured party (in the example we used above.) If you caused harm to someone from an accident and you’re liable for their care, the umbrella policy ensures they’ll get the appropriate amount of money for their care. Finally, if you have a decent driving record and don’t have a boat or a lot of cars, this type of policy is relatively inexpensive. It’s about $250/300 a year per million. 

Aging Parents

Another situation that comes about as people grow older is caring for aging parents. Sometimes this means adding onto your home to create space for parents to live. If you’re one of these people, it’s important to talk to your insurance agent about this situation. There may be additional coverage you need due to this change within your home environment.

So, if you’ve become empty nesters approaching retirement (or even if you’re not), it’s good practice to periodically evaluate your insurance needs based the various types of insurance we’ve identified above. By reviewing the different policies, it provides you with the opportunity to reevaluate your needs during different phases of life. For more information, listen to our podcast below. Contact us if you have questions about your insurance needs as you approach retirement.