September is Life Insurance Awareness Month, which makes it a good time to talk about a financial planning topic many people would rather avoid.
In fact, a 2026 Life Happens survey found that 39% of adults would rather clean out their email inbox than figure out how much life insurance they need. That probably isn't surprising. Life insurance forces us to think about something none of us particularly enjoys thinking about: what happens financially to the people we care about if we're no longer here?
But there is another reason people put it off. Life insurance can seem complicated. How much do you need? What kind? How long should you keep it? And what about policies you bought 10, 20 or even 30 years ago?
Those are important questions because the purpose of life insurance changes as your life changes.
The Question Isn't Simply, "Do I Have Life Insurance?"
A better question is:
If something happened to me tomorrow, what financial problem would my life insurance need to solve?
For a young couple with children, the answer might include replacing income, paying off a mortgage, providing money for childcare or education, and allowing the surviving spouse to continue saving for retirement.
Twenty years later, the mortgage may be much smaller, the children may be financially independent and retirement savings may have grown considerably.
The need for insurance may have decreased.
Or it may simply have changed.
Someone approaching retirement might no longer need to replace 20 years of earnings, but insurance could still be important to replace a pension that disappears at death, provide financial security for a surviving spouse, create liquidity for an estate, leave money to children or grandchildren, or provide for someone with special needs.
That is why life insurance shouldn't necessarily be a "buy it and forget it" decision.
Life Insurance Should Have a Job
One of the easiest ways to evaluate your coverage is to give each policy a specific job.
Perhaps its job is to:
- Replace income for a spouse or family.
- Pay off a mortgage or other debt.
- Fund children's education.
- Replace a pension or other income that ends at death. For a surviving spouse, income generally decreases and income taxes oftern increase!
- Provide money to care for a dependent or family member with special needs.
- Provide estate liquidity or create an inheritance.
- Protect a business or fund a buy-sell obligation.
- Cover final expenses.
Once you know the job, you can begin asking whether the amount and type of insurance you own are still appropriate.
A $1 million term policy purchased when your children were five and seven may have served an important purpose. If those children are now 30 and financially independent, your mortgage is paid off and you have accumulated substantial retirement assets, that same need may no longer exist.
On the other hand, allowing a policy to lapse simply because you are retiring could also be a mistake if your spouse would lose a significant portion of household income when you die.
The answer isn't automatically more insurance or less insurance.
The answer should come from the financial plan.
Don't Forget About Life Insurance Through Work
Employer-provided life insurance is another area that deserves attention.
Many people look at their employee benefits and assume they have adequate coverage because their employer provides one or two times their salary.
But is that enough?
And equally important: what happens to that insurance when you retire or change jobs?
Someone nearing retirement may discover that coverage they have relied upon for years will disappear, become substantially more expensive, or need to be converted to an individual policy.
That is much easier to address while you are still healthy and employed than after retirement.
Old Policies Deserve a Review Too
Permanent life insurance policies purchased years ago can also be worth reviewing.
The fact that a policy is old doesn't necessarily mean it is bad. In some cases, an older policy may have guarantees or economics that would be difficult to duplicate today.
But you should understand what you own. What is the current death benefit? What is the cash value? Are premiums still required? Are dividends being used appropriately? Is the policy guaranteed to remain in force? Has the original reason for purchasing it changed?
And before surrendering or replacing an older policy, it is particularly important to understand what you may be giving up, and also realize there a companies that may be willing to purchase your policy for more than the cash surrender value.
Life Insurance Can Sometimes Do More Than Provide a Death Benefit
Some life insurance policies can also play a role in long-term care planning. Certain permanent policies include long-term care or chronic illness riders that may allow the policyowner to access part of the death benefit while still living if they meet specific qualifying requirements.
For some families, this can provide another source of funds to help pay for care while still preserving a death benefit if long-term care is never needed.
These policies can be useful planning tools, but the benefits, costs, eligibility requirements, and impact on the remaining death benefit vary considerably. That is another reason life insurance should be reviewed as part of the overall financial plan rather than looked at in isolation.
Your Beneficiary Designations Matter
Even a perfectly designed life insurance policy can create problems if the beneficiary designation hasn't been reviewed. Marriage, divorce, death, remarriage, the birth of children or grandchildren, and changes in estate planning can all affect whom you want to receive the proceeds. Your will generally does not override the beneficiary named on a life insurance policy.
A periodic beneficiary review should therefore be part of your overall financial and estate planning.
Life Insurance Is Only One Piece of the Plan
Life insurance is not an investment competition, and the goal isn't to own as much insurance as possible. Its purpose is to transfer a financial risk that you don't want your family to bear.
During your working years, that risk may be the loss of decades of future earnings. Later in life, the risk may be the loss of retirement income, the need to provide for a surviving spouse, an estate-planning objective or something else entirely.
For some people who have accumulated sufficient assets, the conclusion may be that they simply no longer need as much insurance as they once did. That's perfectly reasonable too.
A Good September Question
Life Insurance Awareness Month doesn't have to mean shopping for another policy.
Instead, use it as a reminder to pull out the policies you already own and ask:
What financial problem is this policy supposed to solve today?
If you can answer that question clearly, you're well on your way to determining whether your life insurance still fits your financial plan.
If you can't, it may be time for a review.
Frequently Asked Questions
1. Do I still need life insurance after I retire?
Maybe. Retirement often reduces the need for income-replacement insurance, but other needs may remain. Life insurance can sometimes help replace pension income that ends at death, protect a surviving spouse, provide estate liquidity, support someone with special needs, or create an inheritance.
2. Should I keep an old life insurance policy?
Don't automatically cancel an older policy simply because you no longer remember why you bought it. Older permanent policies may have valuable guarantees, cash value, or favorable features that would be difficult to replace today. Review the policy's benefits, costs, guarantees, and current purpose before making a decision.
3. What happens to my life insurance when I retire or leave my job?
Employer-provided coverage may end, decrease, or become more expensive when you leave your employer. Some policies can be converted or continued, but the cost may change significantly. If you rely on workplace coverage, review your options before retirement or a job change.
4. Can I have too much life insurance?
Yes. Insurance that was appropriate when you had young children, a large mortgage, and many working years ahead may no longer be necessary later in life. The goal isn't to own as much insurance as possible. It is to have enough insurance to address the risks your financial plan cannot comfortably absorb.
5. Is life insurance part of a financial plan or just an insurance decision?
It should be part of the financial plan. Life insurance works best when it has a clearly defined purpose and is coordinated with retirement income, investments, taxes, estate planning, Social Security, pensions, and the financial resources available to survivors.
6. Can life insurance help pay for long-term care?
Yes. Some life insurance policies include long-term care or chronic illness benefits that allow you to access part of the death benefit during your lifetime if you qualify. This can provide another source of funds for care, although using the benefit generally reduces what ultimately passes to beneficiaries.
#LifeInsuranceAwarenessMonth #LifeInsurancePlanning #FinancialPlanning #RetirementPlanning #EstatePlanning