Cancelled DW's life insurance policy

[disneysteve]

I finally did something that's been on the procrastination list for ages. I cancelled my wife's life insurance policy. One of the questions we had when we met with the CFP recently was if we needed it for any reason and he agreed that we don't, so out it goes.

Premium is only a tad over $600/year but why pay for it if we don't need it. I'd rather cut the monthly expenses by $51.

I also asked our agent about cancelling one of my disability policies. He answered and said he wanted to check on that because he thinks my policies, which are 30 years old, have lifetime benefits that are no longer available anywhere in the industry and might be worth keeping until I actually retire. I'm open to hearing his answer before I make a final decision.

[bjl584]

Good move on cancelling the insurance. I'm sure you both would be fine should something happen to either of you.

It might be worth keeping the other policy. Sounds pretty benefit rich

[disneysteve]

I got an email today that the life policy has been canceled and we'll be getting a check for $262. I wasn't expecting that since we pay on a monthly basis, but I suppose that is going toward an annual premium so we must be paid a few months ahead.

[LivingAlmostLarge]

Do most people cancel life insurance as soon as their kids finish college? Ours are timed to expire when our youngest finishes college I believe.

Mine is $234/year for 25 years $500k and DH has $1034 and $938 for 2 separate $2m policies also 25 and 20 years.

[srblanco7]

We've done the same - cancelled all life insurance policies. The only remaining life insurance we have is valued at 1x salary thru my work, which is provided free of charge as a benefit.

[disneysteve]

Do most people cancel life insurance as soon as their kids finish college?

Probably not.

The purpose of life insurance is to provide for those who are dependent on your income and would suffer financially if you died. College costs are certainly one factor but if you still have a mortgage and/or other debts, or it your spouse doesn't work or earns a lot less than you and couldn't maintain their lifestyle without your income, you probably still want that insurance in place. Maybe you help support your elderly parents. Or maybe everybody would be okay but you want to leave a nice gift behind for some charities that are important to you.

At this point, we just don't need insurance on DW. If she dies, I'd have to pay funeral expenses but that's about it. I wouldn't need childcare or household help so I wouldn't incur any new expenses. Honestly, my expenses would likely drop with one less person to feed and clothe and insure and provide for.

I'm still up in the air about my own life insurance. She'd probably be just fine without it but I'm hesitant to drop it yet. I may look into reducing my coverage to see how much that would save us.

[kork13]

Steve, I don't recall your ages -- are you both able to draw from your retirement accounts without penalty yet? If so, given your recently boosted net worth, you probably have enough between those & your other accounts that your wife could do just fine without you, just drawing on your assets.

If that's the case, you could likely just drop your all of your life insurance, then build a plan for your wife to follow in the event of your death.

[disneysteve]

Steve, I don't recall your ages -- are you both able to draw from your retirement accounts without penalty yet?

No. We're both 57 (well DW turns 58 next week) so we've still got some time. We do have a fair amount in taxable accounts though so I don't know that that's a deciding factor either way. I also have some coverage through work (2 x income I think) so as long as I'm still working, there would be that. Our CFP pointed out that the only significant thing that changes if I die is the total amount of SS income there would be for DW going forward.

I'm sure I'm being overly conservative by keeping it. As I ease into retirement and adjust to the income changes that brings, I'm sure I'll continue to reassess and drop it once I'm more confident in our actual numbers.

[disneysteve]

I also asked our agent about cancelling one of my disability policies. He answered and said he wanted to check on that because he thinks my policies, which are 30 years old, have lifetime benefits that are no longer available anywhere in the industry and might be worth keeping until I actually retire. I'm open to hearing his answer before I make a final decision.

I got all the info for the disability policies. I have 4 policies. Three of them have lifetime benefit terms (LTB) meaning that if I become disabled before age 60, the benefits would continue for life. Apparently policies like that are extinct and no longer offered. The fourth of my policies doesn't have that, so benefits end at 65. Based on that, I've decided to keep the 3 with LTB for now and I'm cancelling the one that doesn't have it. That will save us another $40-some a month, so about $95/mo between that and the life policy.

[scfr]

I'm still up in the air about my own life insurance. She'd probably be just fine without it but I'm hesitant to drop it yet.

Why not let your wife decide? It sounds like there isn't a clear choice mathematically/financially, so maybe leave the decision up to her since she's the one who would be living with the consequences of the decision?

[disneysteve]

I got an email today that the life policy has been canceled and we'll be getting a check for $262. I wasn't expecting that since we pay on a monthly basis, but I suppose that is going toward an annual premium so we must be paid a few months ahead.

I got the statement of policy surrender for the disability policy, along with the $293 refund. Again, unexpected but a nice little perk. Not only will we now save about $95/month but we also got back $555 in the process.