Millions of American retirees continue paying premiums for life-insurance policies they no longer need. Are you among them?

If your kids are grown and your estate won't be subject to taxes after you and your spouse die - that is, if you expect it to be worth less than $625,000 this year (a ceiling that will rise to $1 million in 2006) - you could divert the premiums to living expenses or long-term-care coverage.If you decide to shop for a cheaper policy, term insurance is usually your best option because it's inexpensive and unencumbered by complex calculations for cash values, surrender charges and the like. But if you'll need insurance for more than 30 years - to pay estate taxes or to leave money to your grandchildren or charity - buy a cash-value policy or a term policy that converts to cash value.

Term policies are generally alike except for two major features. A convertible option lets you switch to a cash-value policy that can remain in force for the rest of your life and builds a savings component.

A renewable policy, on the other hand, lets you continue the term insurance beyond the original period. Prices will jump when you convert or renew because they're based on your age when you make the change, but you won't need to take another medical exam. These features come in handy if you want coverage beyond your original term but your health has gone downhill.

Term insurance that can convert to a competitive cash-value policy or that's renewable until the term is over doesn't always cost more than a policy without those features, says Mark Cortazzo, a financial planner in Denville, N.J., but you need to ask if those options are available.

To estimate how much you need, in any case, figure out the annual income you'll need to replace, subtract income your family will have, and then estimate the extra capital you'll need to fill the gaps. You'll also have to account for longer-term needs, such as a college fund, and weigh those against existing resources you have to invest.

Expect your family to spend the investment income, then gradually deplete the principal.