Retiring? Here's the insurance you still need

Homeowners insurance

Even if your home is paid off, you most likely will still need the protection homeowners insurance can provide. Not only will it rebuild your house if necessary, but homeowners insurance also provides liability protection in case you get sued.

You can save money by substantially raising your deductible. You should have enough savings set aside to pay for the first $1,000, $2,500 or even $5,000 of home damage out of your own pocket. Raising your deductible to those amounts will save considerably on your premiums.

Life insurance

If your children are grown and financially independent, and you have enough in assets to support your spouse should you die, then you may no longer need life insurance. On the other hand, if you're going to leave a considerable estate, life insurance could be used to pay any estate taxes that would be due.

Video: Do you need long-term care insurance?

In 2009, estates of more than $3.5 million ($7 million for couples) are subject to estate taxes. The portion of an estate beyond the exemption is taxed at 45%. Although the estate tax is scheduled to be repealed in 2010, the repeal is currently slated to last just that year, with estate taxes returning for estates worth more than $1 million in 2011.

Your best bet is to consult a qualified financial planner, probably in conjunction with an estate-planning attorney, to evaluate your individual insurance needs and the policies you own.

Liz Pulliam Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "Your Credit Score: Your Money & What's at Stake." Weston’s award-winning columns appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Updated Sept. 15, 2009

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