Some may think life insurance is best to purchase earlier in life to protect your spouse and children. However, retirees can also benefit from life insurance in several ways. It helps them protect their partner, supplement their retirement savings, pass more wealth down to their heirs, and assist loved ones with the policyholder's final expenses. With that in mind, this article will cover four reasons why retirees may need life insurance.

1. Can help you pass down more wealth to your heirs

Life insurance policy death benefits are generally tax-free. This lets you pass down more wealth to your heirs because they may not have to pay estate taxes on the death benefit. As a result, your children and grandchildren can have more money to save, use for college, and pay off debts.

2. Can protect your partner

Once you retire, it's important to consider what could happen to your partner if you pass away before them. A life insurance policy can be key to ensuring they're protected. If you pass away, your partner could use the death benefit to supplement their savings and pay off any debts you had so they can remain financially secure while they grieve.

3. Can help you supplement retirement assets

A permanent life insurance policy, such as whole life insurance, universal life insurance, or a life insurance retirement plan (LIRP), could help you build wealth through the cash value growth component. Part of each premium goes into the cash value and grows tax-deferred at a specific rate.

As your cash value grows, you may be able to withdraw from it or borrow against it with favorable terms, depending on the policy. This can offer a substantial source of savings in retirement to help you live your desired lifestyle, assist your children and grandchildren with college costs, and more. And if you ever surrender your policy, you'll receive the cash value minus surrender charges.

4. Can help you cover final expenses

According to Forbes, a 2021 National Funeral Directors Association study found that the median cost for an adult funeral and burial was around $7,848. That doesn't include end-of-life medical costs, either. A life insurance policy can help your loved ones afford these costs without financial strain. 

Final expense insurance can be some of the best life insurance for seniors whose loved ones only need enough to cover these final costs. Death benefits are smaller, usually under $50,000. However, this is often enough to cover end-of-life costs and allow loved ones to take time off work to grieve and cover related travel costs. 

Meanwhile, final expense insurance premiums are far lower, helping you save money. And these policies also come with cash value, helping you build wealth.

The bottom line

A life insurance policy can serve several financial needs among retirees. It can work great in an estate plan, letting you pass more wealth down to your heirs with the tax-free death benefit. It's also helpful for protecting your partner when you pass away, helping them pay off debts and supplement their assets.

Life insurance for retirees helps you boost your own savings through the cash value. Finally, the death benefit can help your loved ones pay for end-of-life expenses and may help them to take time off work while grieving. When deciding which life insurance policy is right for you, make sure you get quotes from multiple insurers. This helps you find the lowest possible rate on the coverage you need in retirement.