Insurance Needs of Individuals Nearing Retirement

Everyone deserves to enjoy a peaceful and carefree retired life. Insurance can play an important part in making your retirement secure and free of worrying about the future.However, the insurance needs of an individual about to retire in a few years can’t be the same as that of a person starting in his professional career or having a significant number of years left until he retires.

Therefore, if you are due to retire in the coming years, say 5 to 8 years, then you might want to revisit your insurance needs to better serve your financial goals once you retire.

Recognise Your Strengths

There could have been many obligations to fulfil while you were young and starting your professional career. You needed to save for the future, build an emergency fund, plan for children’s education, vacations, etc., while being on a limited budget.

However, at this stage of life, you might have some financial stability because

  • You are probably well-established in your career with a good paycheque. Hence, you might have a higher percentage of disposable income.
  • Your children are probably either established or at least less financially dependent on you.
  • You might have a decent contingency fund to tackle any immediate emergency.

Realign Your Insurance Needs

Once you have recognised your strengths, it may be the right time to realign your insurance needs to suit the following purposes.

  • Reduce Risk in Your Portfolio

Even if you have a higher risk appetite and your portfolio is doing well, you should consider reducing your exposure to market-linked financial instruments, including your insurance. Some insurance plans automatically reduce market exposure as you grow old.

However, if you manually manage capital allocation in your plan, then you should gradually shift your portfolio toward low-risk asset classes.

  • Plan for Regular Income

You will cease to have a regular income after you retire. Therefore, you should consider investing in a superannuation plan to ensure that you keep getting a fixed and regular pension post-retirement. Such pension plans can help you maintain liquidity in your accounts to meet your daily expenses.

  • Build Your Retirement Corpus

Invest in an insurance plan that can help you in getting a lump sum amount once you retire. Such a golden nest can help you in setting up a stand-by fund for unforeseen circumstances in your retired life.

  • Health Insurance

It is natural to experience health complications and illnesses at an old age. Therefore, it is wise to have an appropriate health cover to take care of medical expenses like hospitalisation, health check-up etc.

  • If you already have health insurance, then stay invested as long as you can.
  • If you haven’t taken any health insurance yet, then you should make it a priority.

Your retirement should be full of joy and happy memories. It is also the time to reflect on your life and the remarkable journey that you have. You can achieve this well-deserved objective by aligning your insurance needs with your age to maximise your potential returns.