Should you still carry life insurance in early retirement?
One of the core goals of FIRE (Financial Independence, Retire Early) is to reduce financial obligations — so it's natural to question whether life insurance still belongs in your plan. If your assets cover your needs and you have no financial dependents, dropping your policy may be a smart move.
But for some early retirees, life insurance still offers value. Maybe you have a partner who isn’t fully financially independent. Maybe you want to cover an outstanding mortgage or pass on wealth tax-efficiently. In these cases, keeping a policy can still serve your long-term goals.
When FIRE families may still need coverage
Even if you're retired or close to it, you may want to keep a life insurance policy if:
You have a spouse or partner who relies on your income stream or benefits
You hold significant debt like a mortgage or private student loans
You want to provide a legacy or cover estate taxes
You're self-insuring but want a buffer for unexpected risks
In these situations, term life insurance — or a small permanent life insurance policy — can offer peace of mind without straining your lean FIRE budget.
When it’s safe to drop your policy
If none of the above apply to you, it may be time to let your policy lapse or opt out of renewal:
You’ve reached full financial independence
No one relies on your income or shared liabilities
You have adequate savings, investments, or passive income to cover final expenses
Letting go of life insurance can feel risky — but if you’ve truly hit FI and have no remaining obligations, it can be a rational next step.
Pros and cons of permanent life insurance for the FIRE community
Pros | Cons |
|---|---|
Offers tax-deferred growth and potential borrowing power | High premiums eat into long-term returns |
Can be used for legacy, estate planning, or flexibility | Often unnecessary without dependents or debts |
Doesn’t count as an asset for FAFSA or some aid formulas | Performance depends on insurer and market conditions |
Disclaimer: Permanent life insurance can be complex. Always review with a licensed financial advisor before integrating into a FIRE plan.
Best types of life insurance for early retirees
For most FIRE (Financial Independence, Retire Early) families, term life is the most practical choice:
Low cost
Fixed duration
Easy to cancel or adjust
Permanent life insurance (like whole life insurance or indexed universal life insurance) may still be worth considering for legacy goals or estate tax planning, especially for high-net-worth FIRE households.
Age | Term policy | Whole life policy |
|---|---|---|
35 | $25/month for $500K, 20-year term | $400/month for $500K lifetime coverage |
50 | $75/month for $500K, 20-year term | $850/month for $500K lifetime coverage |
Methodology: Estimated sample rates based on Policygenius quoting data as of July 2025 for eligible non-smoking applicants in good health. Rates may vary by insurer, age, and underwriting class.
How to align insurance with your financial independence plan
FIRE isn’t just about quitting your job — it’s about designing a life with fewer obligations and more intentional choices. Any insurance you carry should reflect that.
Ask yourself:
What risks am I actually trying to cover?
Could my assets handle that scenario?
Is this policy providing financial efficiency or just inertia?
If the answer points to dropping a policy, do it with confidence. If it points to keeping one, you’ll know exactly why.
Consider using a life insurance calculator to get a personalized estimate based on your goals. This article is not a substitute for individualized financial planning.
Bottom line
Life insurance isn’t a must-have for every early retiree — but for some, it still makes sense. If you want to cover a mortgage, protect a partner, or plan for estate needs, keeping a lean policy can align with FIRE principles.
Just make sure you’re not holding on to old assumptions. Review your coverage regularly, and make sure it supports the life you’re intentionally building.
This article is for informational purposes only and does not constitute legal, tax, or financial advice. Please consult your own legal or financial advisor for guidance specific to your situation.
References
IRS Publication 590, Individual Retirement Arrangements
Society of Actuaries, Life Insurance for FIRE Families
CFPB, Consumer Guide to Life Insurance
Policygenius internal pricing data (2025)
