Should we stop paying for term life insurance?
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Anonymous
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We got a 1 million dollar term life insurance plan on DH when our first child was born. Oldest is about to start college with a fully funded 529. Youngest is in private school and will have a fully funded 529, too. I have been a SAHM mom and will be returning to work, likely making a fraction of what I used to earn. Net worth is approx. 6 million and we are in our early 50s. The life policy is $50/month. Since the premium is so low, I am inclined to keep paying for it, but not if it’s a waste of money. Advice please?
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Anonymous
| Of course not!! |
Anonymous
| Keep it. |
Anonymous
| You don’t need the premium dollars or the insurance but it’s actuarially cheap so do what you want. High likelihood you won’t need it but only you can decide if it’s a “waste” or you like knowing it’s there. |
Anonymous
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Are you sure the premium stays the same? Often they jack up after original time period.
truthfully either way I would not - your kids are old enough and you have enough money it’s unnecessary. You are better off investing the premium amount. |
Anonymous
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How liquid are your assets for your net worth?
Are they all tied up in your real estate? Would you need to sell the house if your DH died next year? |
Anonymous
| When our term life ive policy was up at 20 years, we were in the same position as you. We let them go, because the policy was going up to a huge annual amount, and we no longer needed it. We originally needed it to cover the mortgage, which is now paid off, college, which is now paid for, and or a nanny if something were to happen to me. None of those things are needed anymore, term insurance policies have ended |
Anonymous
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OP
KEEP IT! |
Anonymous
| Based on the timing, I'm guessing it's a 20 year level term On year 21, the premiums will increase significantly. I'd keep it until then, and then allow it to lapse. |
Anonymous
| You make enough to have accumulated $6m in your 50s and you are focused on whether you should keep paying a $50/month life insurance premium? You keep in because the risk is distributed across the years with a level premium and you cannot get a policy in your 50s for that price. |
Anonymous
This is what we plan to do, in a similar situation (we are currently something like 12 years into the 20-year term). |
Anonymous
| If you are still within the original coverage window and it's a level term policy, you should ABSOLUTELY KEEP IT. The risk premium is spread evenly across the entire term, but the risk of loss is heavily skewed towards the end of the period. It's simple math. At this point you are much better off continuing the policy until the end of the term. |
Anonymous
| I was 23 when my dad died. My undergrad was paid off, but I was a grad student living across the country with a beater car and no real income. The life insurance is the single reason I have a stable life in my 30s. My mother kept the other money as she still likely had another 30-40 years to go. I’d keep paying it. |
Anonymous
| It seems like a waste of money, given the age of your children and your financial position. |
Anonymous
| Same situation. Let it lapse. |