Life insurance and retirement: What you need to consider

It seems like everything changes when it's time to retire. Life as you've known it is making a dramatic shift, and much of what you've planned for over the years is now becoming a reality.

While carrying life insurance is obviously important in the years leading up to retirement, many people are confused about what they should do with their policies once they've left the workforce.

The approach you should take to life insurance at retirement is different for everyone. Many factors are in play, such as how much you've saved, when you started saving and whether you remarried or had children later in life.

If your kids have flown from the nest and it's just you and your spouse at home, you need to decide the income you want to provide to your mate. To make a realistic assessment, subtract other income sources like retirement accounts, pensions and your spouse's Social Security. The figure that's left after you subtract is usually what you'll want to provide via life insurance. Of course, if there are other beneficiaries, you'll want to take that into account as well, according to CNN money.

If you're considering changing your life insurance, you may want to consider whether term life insurance or permanent life insurance is a better option for you.

Term life insurance: This coverage lasts for a "term" you choose, usually 10, 15, 20, or 30 years. During that time, your life insurance premiums are typically guaranteed not to increase. If you pass away during that time period, your beneficiaries get a cash death benefit. If you live longer than the term period, you have the option to continue your life insurance coverage for an annual, renewable premium, which is generally much higher.

Permanent life insurance: A permanent life insurance policy is meant to last the rest of your life. Part of the money you pay into your permanent life insurance policy is set aside in an account where it can grow cash value that you can tap into later on.

Having life insurance protects a lot of important things. If something should happen to you, you'll be able to give your loved ones some extra piece of mind. For instance:

* If your spouse is depending on your income for retirement, it can help keep those plans on track.

* If you've got a mortgage, it can help pay off that debt so your family won't lose their home.

* If you want your kids to go to college, or you want to leave money behind for them, it can help you achieve those goals.

Since your finances could be tighter after retirement, it's important that you know your options for low-cost life insurance, and whether you can afford to cut back on it. Deciphering the amount you want to be able to provide is a first step, but you should also contact providers to get life insurance quotes.