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Time to Drop Term Life Insurance?
Old 09-26-2014, 09:26 PM   #1
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Time to Drop Term Life Insurance?

I am 57 and RE. DW is 59 1/2 and still w***s. Her earnings pay our expenses. If she were to retire, we could live on 4% SWR and draw SS at some appropriate age. No pensions.

If I were to go soon, she would have no financial impact. My eating, driving, etc, might offset the cost of someone to cook, clean, whatever it is I do.

If she were to go soon, I would get the equivalent of 3/4 year of her wages in company life insurance. Between that and the after-tax money available, I could get to 59 1/2. For future health insurance, I would go Obamacare. Currently on her company sponsored plan.

When we were young, the association insurance we have was dirt cheap. Now, at our age, the cost is $1,400 for me and $1,000 for her. This is for 3x annual expenses on each. We have asked for some kind of preferred rates without success. Neither has any condition which is life threatening.

We have massive LTC.

Is it time to drop that term life insurance?
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Old 09-26-2014, 09:30 PM   #2
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Is it time to drop that term life insurance?
Yes.
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Old 09-26-2014, 09:37 PM   #3
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Yes,
For what reason do you still have life insurance?

Kids in college?
Mortgage to pay off?
The only you'd need to have was replacement of her income if you didn't have enough to retire.

Drop it.
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Old 09-26-2014, 09:50 PM   #4
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I have not had life insurance for many years. No kids, no wife, enough assets to bury me.
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Old 09-26-2014, 10:05 PM   #5
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Yes,
For what reason do you still have life insurance?

Kids in college?
Mortgage to pay off?
The only you'd need to have was replacement of her income if you didn't have enough to retire.

Drop it.
My reasons for keeping may be instructive to some. Each year DW and I would evaluate where we were with FIRE. Then we would decide on steps to do next year. We have been in the kid mode, with college, first homes, first cars. Those happened in 2010, 2011 and 2012. We have done countless other simplification steps. I RE'd in 2013. This is the first renewal after my RE. And when the last kid graduated from college we cut the coverage in half. So this is just one more step. We wanted to see if we could live on her wages. We can.
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Old 09-27-2014, 12:07 AM   #6
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Congratulations!

Based on what you were saying, I think you are set
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Old 09-27-2014, 09:42 AM   #7
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At the most I would keep the insurance on the breadwinner until she retires, but drop the policy on you and invest the $1400 premium.
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Old 09-27-2014, 09:51 AM   #8
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Yes.
+1
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Old 09-27-2014, 09:54 AM   #9
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I've never had life insurance, but I also never had any kids.


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Old 09-27-2014, 10:50 AM   #10
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At the most I would keep the insurance on the breadwinner until she retires, but drop the policy on you and invest the $1400 premium.
Better than that - shop around! Just using a random site like intelliquote.com

Using your state in your profile, and just assuming a hwp spouse, and best health class, I get quotes on a 60 year old female at just $650/year for $250,000 coverage for a 10-year term policy (the shortest term they offer).

Or, go $150,000 coverage for 10-year term for $500/year. Even if she only works another 5 years, for the same price you get double the term.

Also, look into that LTC policy coverage you have. You often get cheaper rates as a married couple vs single, but see if perhaps there is a rider or some other policy you could convert to whereby when one spouse passes on, there could be a sort of "refund" or some other adjustment to the LTC policy (some companies offer "return of principle" if you die without using the LTC policy. They cost more, so be sure to crunch the numbers). That might help offset your expenses enough to not need the life insurance on her at all.
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Old 09-27-2014, 11:03 AM   #11
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Life insurance is for couples who don't have "an estate" to pass on to survivors. If you're FI, you have an estate, you don't need to buy one via life insurance. I haven't had life insurance many years. If something happens to me, DW is all set financially at least (rut-row, wonder if she knows?).
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Old 09-27-2014, 11:19 AM   #12
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IIRC dropped it as soon as kids got in college, which we had provided for in our planning. DW would have had to likely reduce lifestyle if I croaked, but figured it was a reasonable risk. I believe I had some survivor pension benefits available. Don't see how you (OP) needs it.
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Old 09-27-2014, 11:20 AM   #13
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We had insurance to cover our mortgage debt while we had a mortgage. We paid off the mortgage earlier this year - we actually cancelled the life insurance earlier than that - since the mortgage was pretty darn small.
Our thinking was that the other one could support themselves and the kids pretty easily without a mortgage.

Our investments are our life insurance now.
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Old 09-27-2014, 12:09 PM   #14
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Ditto here. I bought a term policy in 1993 right after DS was born and we bought our first house. The premium jumped after 10 years (as I knew it would) but then was not going to change until 2018. By then I wouldn't need one. It was a large policy, designed to support DS and DH. Moved in 1999, refi'd to a 15 year in 2003 to put in a pool and home theater (retirement planning folks, it's hot and I'm swimming today, Blockbuster at home has nearly 7000 free movies). But I digress.

Paid off mortgage early this year and when the life insurance premium notice came a month later it went into the shredder.

Life insurance payout counts in net worth calculations for estate tax planning. Didn't want to hit that $5M mark just because of life insurance.


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Old 09-27-2014, 12:20 PM   #15
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Our policies were intended to replace our salaries in the event of a death of one of us. Once we achieved FI, the need for insurance expired.

I'd vote cancel and invest the proceeds . . . or spend them if you'd rather.
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Old 09-27-2014, 12:58 PM   #16
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We had insurance to cover our mortgage debt while we had a mortgage. We paid off the mortgage earlier this year - we actually cancelled the life insurance earlier than that - since the mortgage was pretty darn small.
Our thinking was that the other one could support themselves and the kids pretty easily without a mortgage.

Our investments are our life insurance now.
Same here. We both worked and could have individually supported the kids no problem, without a mortgage. So we bought a 20-yr term policy when our oldest was born. We also canceled as soon as the mortgage balance became inconsequential. IMHO, life insurance is one of those items that is frequently over-purchased, and held longer, relative to the real need.
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Old 09-27-2014, 02:45 PM   #17
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At the most I would keep the insurance on the breadwinner until she retires, but drop the policy on you and invest the $1400 premium.
+1

I'd probably drop both if mortgage is paid off and kids' college taken care of.
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Old 09-27-2014, 03:20 PM   #18
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It sounds like a 4% SWR + Social Security on both of you will fund an acceptable lifestyle for both of you.

I'd say that a 4% SWR (from that some portfolio) + SS on one of you should fund an acceptable lifestyle for one of you.

I would drop the life insurance.
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