Mortgage-free retirement and your insurance needs

So, you’ve paid off your mortgage and are ready to enjoy your golden years debt-free? That’s a fantastic achievement – you can stop and smell the roses, with greater cashflow and the security of a house you own outright.

And as you celebrate this milestone, now can also be a great time to review your insurance plans. Here’s why.

You may need less life insurance

One the key reasons why people take out personal insurance is to protect their ability to repay the mortgage and their family’s financial future.

Life insurance is a common type of cover amongst homeowners, as it provides a powerful layer of protection against the unexpected, with the flexibility of using the lump-sum amount for income replacement, mortgage repayments, and to leave a legacy.

But as your life changes, so may your insurance needs. Over time, you pay down the mortgage and build equity. Children grow and establish their own independence, starting their own career and families. So, if you’re now living mortgage-and dependent-free, you may not need as much life insurance as before.

Depending on your legacy goals, you might be able to reduce your life insurance amount and divert the money you save to other financial needs – like much-needed retirement savings or other types of cover.

You may need health insurance

If you identify that life cover can take the backseat from now on, you may be able to free up room in your insurance budget to focus on other types of cover.

Take health insurance, for example. Premiums increase with age, along with the likelihood of needing health cover. The cost can make it difficult for some policyholders to maintain their cover when they retire. If you can trim down your life insurance premiums, you may be able to use the money you save to afford an appropriate level of health insurance, for as long as you need it.

Is it time to review your insurance needs?

In retirement, every dollar counts, which is why it’s worth exploring different strategies to make your nest egg go the distance. The key is finding the right balance – you need to balance your savings with your insurance needs.

As you prepare for next stage of your life, now may be a good time to review your insurance plan and make sure that you’re getting the most value for your money. And with so much to think about, you may want to consider getting in touch with an insurance adviser.

There are hundreds of insurance advisers across New Zealand, specialised in assisting Kiwis with protecting their future at a price they can afford. If you’re considering taking out new cover and have pre-existing medical conditions, an adviser can also help you understand your options.

Click here to find a financial adviser specialised in Personal Risk near you today.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.