If you already own life insurance, retirement is a useful time to check what the policy still provides, what you must pay and what would happen if you used its cash value. Start with the contract you have before deciding to keep it, change it or replace it.
A policy can protect someone who depends on you. Some policies also provide access to cash, but that access can affect coverage, costs and taxes. A projected stream of policy loans is not guaranteed retirement income.
If your first question is whether you still need a death benefit, start with our guide to life insurance after 65. This checklist takes the next step: reviewing an existing policy alongside your retirement budget.
Gather the figures before making a change
You don’t need to understand every line of the contract before asking for help. Begin with the latest statement and ask the insurer for anything missing.
| Information to gather | What it helps you check |
|---|---|
| Current death benefit and beneficiary record | Who would receive the money, and how much after any debt? |
| Required premium schedule | What must you pay, when, and for how long? |
| Account value and net surrender quote | What stays inside the policy versus what you would receive by ending it |
| Loan balance, accrued interest and loan provisions | How debt affects costs, available cash and the benefit |
| Guarantees, riders and deadlines | Which conditions keep benefits in force and which options expire |
| Updated illustration, where applicable | How intended payments and transactions affect future coverage |
The NAIC’s Life Insurance Buyer’s Guide provides a starting point for reviewing coverage, affordability and policy changes. Keep these documents somewhere the appropriate family member can find them.
Check premiums against your retirement budget
Look beyond whether this month’s payment is manageable. Ask what you may owe later and how that fits alongside housing, health care, everyday spending and an emergency reserve.
For term insurance, check the expiry date, renewal cost and any conversion deadline. For whole life, distinguish the contractual payment schedule from a plan that assumes dividends will pay future premiums. Dividends are not guaranteed, as the Texas insurance regulator explains.
For universal life, a flexible payment is not a promise that the amount you currently pay will always be enough. Interest credits, insurance costs and other deductions affect funding. The North Carolina Department of Insurance explains why continued monitoring matters.
If premiums are becoming difficult, ask about options before stopping payment. Depending on the contract, reducing coverage or choosing a reduced paid-up option may be possible. Get the resulting benefit and costs in writing. The New York regulator describes reduced paid-up insurance.
Separate a coverage guarantee from a cash-value projection
A no-lapse guarantee can protect coverage while its conditions are met. It does not automatically guarantee a particular cash balance or the retirement withdrawals shown in a sales illustration.
Ask the insurer to identify the guarantee’s duration and the payment and timing requirements that maintain it. Then ask whether a planned loan, withdrawal or benefit change would affect those requirements. Don’t assume an old illustration still describes the policy you own today.
For IUL, our plain-language explanation of how the policy works distinguishes the insurance contract from its interest-crediting features. A cap or floor describes part of the crediting calculation, not the whole policy’s return after costs.
Request an illustration that includes your actual plans
For an existing policy, ask for an in-force illustration using current values, actual debt and the premiums you intend to pay. If you expect to take money out, include the intended amounts and timing.
Compare guaranteed values, current nonguaranteed projections and lower-credit scenarios. Ask:
- How long does coverage remain in force under each scenario?
- What happens if credits are lower or loan interest is higher than assumed?
- How much additional premium would be needed, and when?
- What benefit would remain for beneficiaries after the planned transactions?
The NAIC explains basic and in-force illustrations. Our IUL illustration-reading guide walks through the columns and questions. An illustration helps test a plan; nonguaranteed figures remain projections.
Compare borrowing, withdrawing and surrendering
These choices solve different cash needs and have different consequences. Ask for a transaction-specific quote rather than treating the account value on a statement as money available to spend.
| Choice | What to review before acting |
|---|---|
| Policy loan | Cash available, loan interest, treatment of the value securing the loan, remaining benefit and future funding |
| Partial withdrawal | Net cash received, any charge, benefit reduction and effect on guarantees |
| Full surrender | Net proceeds after charges and debt, tax consequences and the loss of coverage |
Our IUL cash-value guide separates account value, surrender value and the death benefit. The IUL loan guide explains borrowing risks in more detail.
Don’t build essential retirement spending around an assumed difference between index credits and loan interest. That difference may not continue, and growing debt can leave less protection for your family.
Check taxes before taking cash
Cash-value transactions are not universally tax-free. The rules depend on the contract, its tax basis, its history and the transaction. Modified endowment contracts have different distribution rules.
Surrender or lapse with outstanding debt can create taxable income even when little cash reaches you. IRS Publication 525 explains the tax treatment of surrender proceeds, and IRS guidance discusses modified endowment contract distributions.
Before acting, obtain the insurer’s current tax-basis and transaction information and have a qualified tax professional review it. A statement showing cash value is not a tax calculation.
Compare changes with the policy you would give up
A new policy may involve underwriting, new charges, different guarantees and new contestability provisions. Compare it with keeping or adjusting the existing contract, using the same coverage purpose and time period.
If a proposal includes living-benefit riders, check their eligibility conditions, limits and effect on the remaining death benefit. Don’t assume life insurance automatically provides comprehensive long-term care coverage.
The Texas regulator outlines replacement considerations. Don’t cancel coverage you still need until any replacement is issued, effective and its terms are understood.
Frequently asked questions
Should I cash in my life insurance when I retire?
Retirement alone doesn’t decide that. Compare the remaining coverage need, future premiums, net surrender proceeds, taxes and the options for changing the existing policy.
Can I stop paying premiums and let cash value cover the costs?
Possibly for a period, depending on the contract and available value. Ask how long coverage would last and which guarantees would remain. Premium flexibility does not eliminate ongoing insurance costs.
Does a no-lapse guarantee promise retirement income?
No. It concerns keeping coverage in force under specified conditions. Cash access and projected policy values require their own review.
Leave the review with one clear next step
Write down the coverage you want to keep, the payments you can maintain and the question that still needs an answer. That might be an updated illustration, a written reduced-benefit option or a tax review before a withdrawal.
You can contact ShieldWise with a general coverage question. Include your state and the purpose of the review. Please leave medical details, account numbers and policy documents out of the general inquiry form. Individual recommendations require an appropriately licensed review.
This article provides general education, not individual insurance, investment, legal or tax advice. Availability, underwriting and guarantees depend on the insurer, contract and state. Guarantees depend on the insurer’s claims-paying ability.