Canceling Term Life Insurance Policy Jitters

[skipro33]

I was quite relieved to finally dump the term life. It meant I now had the means to cover what ever and didn't need it. Sorta like a loan; rather have the cash to just buy stuff than to borrow to get it.


I also dumped my whole life, a policy my parents bought when I was born and handed over to me to continue or drop as I felt to do. I cashed it in and used the funds to finish out my garage; sheetrock, lighting, cabinets, work benches, tool chests with tools, new lawn tools, etc. I thought it was pretty cool I got to use the policy instead of my heirs.

[DrRoy]

Did the same decades ago.

[joeea]

Quote:

Originally Posted by Drake3287 I'm not sure who won in the long run, me or Met Life!

Ask your family if they would rather have you around, or have the cash.

Quote:

Anyone else have that dreaded feeling after canceling a Life Insurance Policy?

My policy term ended right at the point where I no longer needed it, so I just didn't purchase another policy.

But no - I didn't feel any dread at all.

[BeachOrCity]

Before you cancel you might want to look at the value your policy provides for the premium paid? If you purchased a level premium for 20 years term policy and you are in year 15 your policy premium is a good value right now (because of age rating and level premiums). And if it is whole life you need to look at it closely as well.
There are situations where I would say it makes sense to keep it even if you don’t need it. Such as if your assets are well in excess of your needs and you want to pass money to heirs and the policy is a good value. Not saying this applies to you but worth thinking about.

[mrfeh]

Quote:

Originally Posted by Drake3287 You know how the second your car warranty expires you have a major mechanical breakdown? Well, the feeling I have as I'm about to cancel both of our Term Life Insurance polices we've had for years. Bought them years ago from Met Life when our kids were young but now that I have a sizable savings/pension and a house paid off I no longer see the need not to mention willing to pay the never ending higher premiums. I'm not sure who won in the long run, me or Met Life! Anyone else have that dreaded feeling after canceling a Life Insurance Policy?

How many years are left on the policies?

We no longer need ours either, but we're going to wait until the term expires.

[mrfeh]

Quote:

Originally Posted by BeachOrCity If you purchased a level premium for 20 years term policy and you are in year 15 your policy premium is a good value right now (because of age rating and level premiums).

+1

This is the situation we are in.

[Tiger8693]

DW and I both have 20 yr term policies. Have to check how many years left. Was thinking about using the premiums from these toward LTC policies as they reach or near term end.

[bingybear]

We cancelled our term insurance per our plans. It served its purpose. We have a small joint whole life policy that we've has a long time with paid up additions. I would think we would be taxed for cancelling. We could convert to an annuity without tax. But for now we will just leave it as is.

[youbet]

Quote:

Originally Posted by bingybear We cancelled our term insurance per our plans. It served its purpose. We have a small joint whole life policy that we've has a long time with paid up additions. I would think we would be taxed for cancelling. We could convert to an annuity without tax. But for now we will just leave it as is.

We followed a similar path. When our renewable ten year term policies came up for renewal at about FIRE time, we just let them drop as the need for life insurance was gone for the most part.

However, we both have small whole life policies from decades ago started by our parents. Their dividends more than pay the annual premiums, the surrender value is small compared to the death benefit and they only take about ten minutes a year to monitor (read and file the annual statement). We let these stand and they will easily cover the short term financial needs for the survivor when the first of us kicks off without generating tax complications.

[gwraigty]

Quote:

Originally Posted by street LTC could be used tomorrow if in an accident or stroke etc. who knows. I have known a few people that LTC saved what they had worked for all their life, then again some never use it. House insurance is another thing do I really need it? My home is only worth 200k and if totally destroyed is HI really worth it in the end. I have only made one claim in 38 years of having home insurance.

I get this, but there is the liability issue if someone is hurt on your property, although how often does that even really happen? Just have high deductibles to keep rates low.

[Hamlet]

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Originally Posted by samclem Dumping it makes the most sense, from what you've said. I think a trickier situation is for the level premium/level payout term policies. As you get near the end of the term period, your mortality risk has increased compared to the first years and the real premiums have decreased (due to inflation--but so has the payout). I wonder if, at some point with some products, you aren't actually in positive territory at the very end of these contracts? You've already paid >way< more than "true" the true mortality risk for the first years, maybe at the end of a 20 year contract you are actually ahead of the curve? It might make sense to hold on to such a policy (esp if your mortality risk had increased a lot due to health, etc) even if your heirs had no especially pressing use for the dough.

Yeah, I know that after seeing my father’s birth mother’s medical history ( he died at 61 ), I’m going to hang onto my policy until the end

[blueskyk]

I didn’t have any dreads on cancelling life insurance once we retired and had alternate plans for financially taking care of each other.

I dragged my feet for years in doing a will as I was certain once it was official, I’d drop off the edge of something...but that was 30 years ago!

[Teacher Terry]

Dropped ours once the kids launched years ago.

[bolt]

Quote:

Originally Posted by Drake3287 You know how the second your car warranty expires you have a major mechanical breakdown? Well, the feeling I have as I'm about to cancel both of our Term Life Insurance polices we've had for years. Bought them years ago from Met Life when our kids were young but now that I have a sizable savings/pension and a house paid off I no longer see the need not to mention willing to pay the never ending higher premiums. I'm not sure who won in the long run, me or Met Life! Anyone else have that dreaded feeling after canceling a Life Insurance Policy?

No, never had that "feeling".

Met life won. Figure out how much you paid them. IMHO FIXED RATE Term life is adaquate and more appropiate as well as less expensive.

Good luck to you though.

[brett]

If you cancel your term insurance today because you no longer need it, are financially secure, and then fall off your perch tomorrow what difference will it make to you?

Will anyone you care about suffer financially or be left in a financially disadvantageous position because of your action?

[Just_Steve]

I pay $16 a month for a low 6 figure policy thats good until I'm 100 years old with no rate increase ever. I will keep it at least until my mortgage and HELOC are paid off maybe longer, who knows.

[Plantman]

Quote:

Originally Posted by Just_Steve I pay $16 a month for a low 6 figure policy thats good until I'm 100 years old with no rate increase ever. I will keep it at least until my mortgage and HELOC are paid off maybe longer, who knows.

I would keep that policy! That's a great rate.

[zippy2020]

I had two Level Term policies, 15 yr period. One has been already canceled by me and the other will be canceled in two years when the level premium term ends.

They were purchased specifically for financial planning purposes. I timed the purchases so the second policy will end when I'm 70, at which point there will be no need for the policy.

I used to work in life insurance and learned very quickly that every life insurance exec I met had purchased Level Term, or later on Universal Life for specific estate planning purposes. Not a single one of them ever purchased, nor recommended, a straight WL policy.

My policies were purchased on-line, at specific companies I know who specialize in term insurance and have the best rates. There is never any follow-up or sales calls, which is how I prefer it.

Spouse never needed life insurance, as we had opted for the extra coverage on his group life term while he worked, and once retired I had assignable rights to 100% of his pension so there was simply no need.

I, OTOH, had no assignable pensions nor retirement portfolio, so getting the term policies was merely back-up planning in case something happened to me (I retired before he did). He could pay off the mortgage, etc., and have the gift of tax-free additional money.

Level term premiums dropped drastically 12 years ago, and the policies did not cost very much. $1200/yr for $750K of protection, even over 15 yrs, is pretty minor when it comes to mitigating risk.

[SumDay]

True confession: we never actually bought a policy outright - we always availed ourselves of our megacorp sponsored policies with ridiculously low premiums. We even cancelled that coverage after the kids were out of college, and we'd joined the two comma club. I realize we were playing with fire, and am incredibly grateful no one was burned.

[Markola]

Quote:

Originally Posted by Drake3287 You know how the second your car warranty expires you have a major mechanical breakdown? Well, the feeling I have as I'm about to cancel both of our Term Life Insurance polices we've had for years. Bought them years ago from Met Life when our kids were young but now that I have a sizable savings/pension and a house paid off I no longer see the need not to mention willing to pay the never ending higher premiums. I'm not sure who won in the long run, me or Met Life! Anyone else have that dreaded feeling after canceling a Life Insurance Policy?

I understand your unease. DW’s term policy for $350K expired this past year at her age 55. We purchased it in our 30s specifically so that there would be cash to pay off the house should the worst happen to her. She has had the Big C twice since, so that policy was a sense of comfort that was hard to let go. My similar term policy for $1M expires this year. The payments to renew are a lot higher and we now consider ourselves self-insured for life insurance, though we still have LTC and Liability policies. I think we have what we need for coverage at this stage but perhaps an annuity will make sense some day for 1/4 or so of our assets.