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Insurance Options for Early Retirees


The pandemic has taught us that you must plan to be self-sufficient, insured and financially sound to survive the unknown.

If you are an early retiree or planning to retire early as I did, then it’s especially a good idea to be proactive and plan for the unknown. At any given time, an emergency, accident, lawsuit, or natural disaster can hit us and shatter our lives. If you lost your income during the pandemic, these words are all too real for you. If you are divorced and/or a single mom, you may be even more overwhelmed.

There are many insurance options to protect yourself. Health insurance, life insurance, long-term care insurance and umbrella insurance are four common types of insurance most people consider, and this is no different for early retirees.

Health Insurance

Health insurance is offered through many workplaces and usually highly subsidized by the employer. Meaning, if your monthly premium was $500 per month, the actual cost before your employer contribution could have been $1,000 or more.

Once you no longer work for an organization, you’ll need to look at other sources for health insurance. Of course, if your spouse works for an organization that offers health insurance, you may use that, especially if it is highly subsidized.

There are also health insurance plans available through the public marketplace (affordable care act), private insurance companies and health sharing plans. Depending on your yearly income from passive sources and/or capital gains, you may not be eligible for insurance through the public marketplace. Private insurance companies include the major providers that are household names. Lastly, health sharing plans are member based in which groups of people come together and share medical expenses.

Life Insurance

Life insurance is a hot topic among early retirees and the FIRE community. Some people believe that once you are financially independent with a large nest egg, you are self-insured. Meaning, if something were to happen to you, your family could handle your last needs and leave money to those in your will. Others believe in always having a life insurance policy no matter what. Life insurance is available through many insurance companies nationwide.

Long-term Care Insurance

Long-term care insurance policies cover nursing and custodial costs in old age. One should consider if they care about exhausting their assets at the end of their life or if they wish to leave assets as inheritance or gifts. Similarly, to life insurance, early retirees should decide how much of their assets they wish to expend on these expenses versus pay for policies.

Umbrella Insurance

There is another type of insurance to cover additional personal claims such as lawsuits. Wealthy individuals may consider an additional type of insurance called personal liability or umbrella insurance. Umbrella insurance steps in when your homeowner’s or auto liability insurance isn’t enough. It provides not only injury and damage coverage but also libel, slander, and several other reasons one may be sued.

For example, you make cookies for your child’s class and a student becomes ill and their parents sue you. An umbrella policy may cover the cost to defend you against a claim in court or even help pay for a legal settlement.

Umbrella insurance quotes can be obtained from the same insurer of your home and/or auto policy. They will first increase the liability limits of the home and auto policies (which results in a small increase in premiums) then they will add a new umbrella policy. Most policies begin at $1 million dollars and are more affordable than you think.

One Policy at a Time

There are many types of insurance to protect us from life’s unknown occurrences.

Health, life, long-term and umbrella are just a few of the types that I have considered for my family’s needs.

Be proactive and discuss your needs with your family. Take it one insurance policy at a time to prevent any anxiety about the unknown or overwhelming feelings.

As you consider different insurance options, it may be a good time to also take a deeper look at your financial situation. I recommend using the free Personal Capital Dashboard to track all of your financial accounts in one place. On my path to early retirement, I’ve used the free tools to create a budget, analyze my investments, and ultimately achieve financial freedom.

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Featured individual is a paid spokesperson and not a client of Personal Capital Advisors Corporation (“PCAC”) and does not make any endorsements or recommendations about securities offerings or investment strategy. The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

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