Where does life insurance fit into your retirement plans?

Well, let's take a look at the reason most people buy (or should buy) life insurance: To protect survivors against financial hardship resulting from the death of the insured.

Need for such protection generally diminishes as you (and the potential survivors) get older. For one thing, if your savings program has been moderately successful, you should have accmumulated a nest egg of assets available to your family in the event of your death.

As you get older, your children are growing up and getting closer to the time when they can be considered self-supporting. And as they get older, a surviving spouse has greater freedom to work outside the home, generating income which then does not have to be provided by insurance.

There are, of course, other questions that can affect your insurance needs. What are the educations plans of your children? Are there dependent parents to be provided for? Do you have a recently acquired home with a large mortgage?

But the three things mentioned first are the most important elements to be considered when reviewing you insurance program in your middle years: The value of your investments, the age of your children and the employment potential of your spouse.

There is a tendency to think of life insurance as "untouchable", but it realy is only a part of an overall financial plan. If you find you need less insurance now than when you and your family were younger, don't hesitate to cancel surplus coverage. If the need goes, the insurance should go with it.

If your present life insurance package includes coverage provided through you work, you must consider the job situation. Is it likely you may change jobs soon? In that case, you may want to postpone any decision on your personal policies until you're settled in a new job.

Can you carry your company insurance into retirement -- either free or at reasonable cost? If not, be sure to retain at least as much commercial coverage as you will want after retirement. Aside from the higher premium cost, your age and physical condition at that time may make it difficult to get a new policy.

Talk to your insurance agent -- he can help you decide how much and what kind of coverage you should have now. The agent can also explain the options available when terminating a policy.

One important tip: The value of life insurance is usually expressed in terms of the dollar or face amount. This is not really important itself.

Instead, you should do your analysis for adequacy in terms of the annual income that insurance would generate for your survivors if commited to a relatively secure investiment. (Nine percent annual yield is a reasonable figure right now.)

In addition to life insurance, you should also take a look at your health insurance package. Keep in mind that your medical needs are likely to go up as you get older.

Does your employer have a comprehensive plan which covers your dependents as well as yourself? Find out if you can carry the same coverage with you into retirement -- and at what cost.

If this isn't possible, you should consider buying individual coverage before you retire. Most health plans have a waiting period before existing medical conditions are covered -- so if you put it off until you retire, there may be a hiatus during which you do not have complete protection.

Many associations -- professional organizations, alumini societies, fraternal orders and special-purpose groups -- offer membership insurance plans. As a general rule, group plans are less expensive and may offer better benefits than individual policies, but don't just assume this is true -- compare before you buy.

Adequate insurance is an essential ingredient in any financial plan. But the definition of "adequate" changes as circumstances change. As you contemplate retirement, modify your insurance program to bring it into line with changing needs -- for now as well as after retirement.