Life Insurance Question

[stevenr]

We are a couple 58/60 without children, and have had life insurance most of our married life. In Fall 2022, new financial planner says we do not need it (and it is quite spendy.) It has always been nice knowing it would be there for the other person, but as a new retiree, it is an unnecessary expense. The premiums are coming due. Follow head or heart?

 

[Aerides]

DH and I don't have kids or life insurance either. We never had it outside of our employee life insurance.

The purpose for most couples having it is to continue to provide finances once one income stops from the death of one spouse. With both of you retired, there's no income to protect. The entire retirement savings goes to the surviving spouse, with slightly lower ongoing expenses. Now if there are factors like major differences in SS, or pensions that don't go to a spouse, then it might need a look. But for the average couple who already have assets to ER, not so much.

 

[Spock]

Excellent timing as I'm in this boat myself.
I've been having major billing issues with Prudential and between that and the cost I'm seriously looking at dumping them. (Tried to change ACH direct billing back in Nov and that seemingly simple change has led to multiple messes).


At 61, no kids, no earned income. I've got two group term life policies. One is costing me $0.50/thousand in coverage and Prudential is costing me $0.97/thousand and rising with every birthday (yeah... I know, thats what term life does).


My wife is really reluctant to cancel. I'm iffy... similar to you "but I've always had life insurance" and dropping it feels wrong... but its more of a habit than a reality.


If I pretend my SS (not started yet) is a pension and calculate PV, it comes within handgrenade distance of the life insurance lump sum.


The one hold out argument is major medical/long term care bills. I'm exploring what a hybrid life/ltc policy would look like but I've heard you have to put 50K down and the coverage "ain't what it used to be" on traditional LTC policies.

I think we're going to drop the life insurance... but I gotta counter that with the post-c*vid "what the he11 difference does it make" attitudes and make sure dropping it is the right thing to do.

For us a clincher would be an anticipated-but-not-counting-on-it inheritance which would also be close to the insurance lump sum.

 

[EastWest Gal]

I dropped it when we were clearly FI. Our invested assets are 5x what the life insurance policy I carried during my working days and when DS was a minor and through college.

 

[CRLLS]

If you didn't have insurance up to this point, would you buy it now? I think that covers the answer IMO. I kept my 25K whole life policy longer than I needed to just to get to the annuitization value at age 65. I enjoy getting the check every month. YMMV.

 

[MarieIG]

The person who needs to be consulted is the spouse.

Is the spouse comfortable with dropping it?

If not, is there a tipping point which would make it easier, i.e. Medicare age, full retirement age? Look to "negotiate" something with an anxious spouse - if applicable.

Full disclosure, I was the anxious spouse. DH took a reduction in his pension to give me a 100% joint and survivor option and continued health insurance for my peace of mind, so that when his life insurance premiums skyrocketed, I was comfortable discontinuing it.

 

[FIcontractor]

Life insurance is there to pay for your responsibilities when you can't anymore. If you have enough to retire then you have enough that you can pay for your responsibilities whether you're alive or not.

 

[pb4uski]

We are a couple 58/60 without children, and have had life insurance most of our married life. In Fall 2022, new financial planner says we do not need it (and it is quite spendy.) It has always been nice knowing it would be there for the other person, but as a new retiree, it is an unnecessary expense. The premiums are coming due. Follow head or heart?

What kind of policy? If it is term life insurance then you probably don't need it. If whole life or universal life or another flavor of life insurance then you need to know more.

 

[ivinsfan]

Some people think cancellation of life insurance is waving the finger at the world, like inviting trouble...

Life insurance talks can get weird...how about asking you wife to think about canceling one of the policies

 

[Badger]

We are both retired and in our mid 70s. No life insurance for my wife but I have a couple of small whole life policies my parents took out for me when I was a child. that are earning dividends that make the payments and then some. They came in handy a few times as a source of money to borrow at a time when it was needed. If not for that I wouldn't have life insurance. My credit union also provides free life insurance of 2K for each of us. Except for the cost of a casket all other arrangements have been made when the bucket is kicked.

Cheers!

 

[Spock]

If you didn't have insurance up to this point, would you buy it now? I think that covers the answer IMO. ....

I like the "if you didn't have it would you buy it now" perspective. It kinda derails the thought train of "but I've always had it/uncomfortable without it" I got locked into.

 

[athena53]

I dropped it when we were clearly FI. Our invested assets are 5x what the life insurance policy I carried during my working days and when DS was a minor and through college.

I did, too. DS was out of college, DH was 15 years older and there were enough assets (plus his own SS) for him to do just fine if I went first. I didn't bother replacing the coverage my employer provided. In fact, I'd been planning on cancelling it at the next Open Enrollment- it was costing me $$ out of pocket because the IRS imputes a value of the premiums the employer paid for any coverage over $50K and counts it as income.

 

[Sue J]

We bought 20 year term policies at age 45. They were very inexpensive. The cost to continue past 65 was huge. At that point the kids were grown and out on their own and DH was successfully retired for 10 years. His pension is 100% survivorship to me and I knew I could make it on that, so we did not renew.

 

[Telly]

I had a term policy. I was ER'd. A year after our youngest graduated from the big U, I cancelled it. It dawned on me that the need for it had passed. Helping the "dawning" was the fact that I was into the inflection point, where the upwards curve for premiums just took off! It was an easy decision!

Originally Posted by CRLLS
If you didn't have insurance up to this point, would you buy it now? I think that covers the answer IMO. ....

I think that's a good basis for decision!

 

[OldShooter]

I had term through a professional association and it was very cheap. We dropped it after the kids were gone and we had significant investment assets; there was no further need. DW and I both had very good jobs, too.

@stevenr, you say that your insurance is "spendy." Something other than term? If so, as @pb4 says, more analysis is needed. In most cases taking out the cash value is the best decision.

 

[stevenr]

Both of our policies are 15 year term. My wife and I have been going back and forth on renewal in light of CFP's analysis. I agree with ivinsfan that cancelling almost is daring trouble. Plus, I recall how many hoops we had to jump through to get a policy. Thanks for everyone for the feedback. It is helpful to read about other people's situations. Today's inclination is to renew and think about it for another year.

 

[pb4uski]

If you are retired and "have enough" without this term life insurance then I would agree with your CFP that you don't need it anymore and you can save the premium. If you are in good health, you'll each live another 2 years +, so why pay premiums for all thase years if you already have enough.

 

[stevenr]

DH and I don't have kids or life insurance either. We never had it outside of our employee life insurance.

With both of you retired, there's no income to protect. The entire retirement savings goes to the surviving spouse, with slightly lower ongoing expenses. .

I am retired; my wife is still working for a few more years.

 

[pb4uski]

But, god forbid, if something happened to your DW, would you continue to have enought to stay retired and live in the lifestyle to which you are accustomed? If the answer is yes, then you don't need life insurance. And vice versa for your DW.

 

[Koolau]

I have a couple of policies that I'm keeping in lieu of going to Vegas to gamble. I took them out when I was young and healthy. Now that I'm old and getting decrepit, I'm more likely to "win" the death lottery (leaving DW much better off.) Good thing I trust her.

I also have a paid off policy that can be gotten into for nursing home payments. No reason to cash it in for the same reasons as the ones I'm still paying on. By the way, I hope the insurance company wins the bet!

Might be a good calculation to make. What are the chances you might "win" against the insurance company? Otherwise, I'm with most that you don't really need a lot of insurance post retirement (at least those of us who planned it reasonably well.) But, as always, YMMV.

 

[iloveyoga]

Some people think cancellation of life insurance is waving the finger at the world, like inviting trouble...

Life insurance talks can get weird...how about asking you wife to think about canceling one of the policies

I was looking for someone to say this. I still have some very basic coverage for DH and myself, even though we are very similar to the other posters ie don't really need it. Is it crazy that I feel like it is bad luck to cancel it after all these years?

Anyway, for the time being I have left our policies in place.

 

[Koolau]

I was looking for someone to say this. I still have some very basic coverage for DH and myself, even though we are very similar to the other posters ie don't really need it. Is it crazy that I feel like it is bad luck to cancel it after all these years?

Anyway, for the time being I have left our policies in place.

Few things are truly "crazy" if you can afford them. If it makes you feel better, then keep them in force.

 

[rodi]

When I had just bought a home in a new city my name must have hit some list for 'sucker'... I was getting cold calls pitching life insurance all over the place. I was single and child free at the time. I remember one conversation in particular:

Salesdude: Don't you want to protect your family.
Me: Nope, just me and my cat. I'm sure a friend will adopt the cat.
Salesdude: But what about your mortgage? Don't you want to eliminate that burden for your heirs?
Me: Nope - my parents will sell the house and any equity will be theirs. They don't need a house in another state.

They guy kept pitching things and I kept shutting him down.

Fast forward 5 years later when I was married, kids etc my husband I both took out term insurance equal to the value of the mortgage. We figured either of us would be fine raising the kids on the survivors income if there was no mortgage bill.

We cancelled the insurance when we paid off the mortgage almost 10 years ago.

 

[Koolau]

When I had just bought a home in a new city my name must have hit some list for 'sucker'... I was getting cold calls pitching life insurance all over the place. I was single and child free at the time. I remember one conversation in particular:

Salesdude: Don't you want to protect your family.
Me: Nope, just me and my cat. I'm sure a friend will adopt the cat.
Salesdude: But what about your mortgage? Don't you want to eliminate that burden for your heirs?
Me: Nope - my parents will sell the house and any equity will be theirs. They don't need a house in another state.

They guy kept pitching things and I kept shutting him down.

Fast forward 5 years later when I was married, kids etc my husband I both took out term insurance equal to the value of the mortgage. We figured either of us would be fine raising the kids on the survivors income if there was no mortgage bill.

We cancelled the insurance when we paid off the mortgage almost 10 years ago.

I had a ton of term when we had the kids. I figure my couple of remaining policies will go a long way in making DW feel financially safe when I'm gone. She can visualize "money in the bank" but mutual funds and 401(k)s are more mysterious to her. It's the least I can do since I've already got them but YMMV.

 

[rk911]

We are a couple 58/60 without children, and have had life insurance most of our married life. In Fall 2022, new financial planner says we do not need it (and it is quite spendy.) It has always been nice knowing it would be there for the other person, but as a new retiree, it is an unnecessary expense. The premiums are coming due. Follow head or heart?

we were in our late 60's when we faced the same question. our NW clicked over into7-digits and wejust didn't need it so we cancelled our life insurance. but, IMO, there's no right answer. if you don't need it (financially speaking) then dump it. dave ramsey, who has a NW in the millions, has kept his life insursance because, as he puts it, "SWI" (Sharon Wants It). if you or your wife want the security blanket and you got the dough to blow then keep it. unsolicited opinion time: if it's whole life i'd first pick up an equivalent $ term policy and then dump the whole life.