One of the first things my husband and I did when we found out I was pregnant was purchase life insurance. We wanted to make sure that, if the unthinkable were to happen to either of us, the survivor and our child wouldn’t be strapped for cash.
We each took out a modest term policy—enough to pay off the mortgage and have a bit of a cushion for childcare and other expenses.
But will there come a time when we don’t need life insurance? Some financial advisors think so.
If you can answer yes to these questions, it’s possible that life insurance is no longer a necessity for you:
- You’re about to retire (or are already retired).
- Your spouse dies before you.
- You have sufficient cash flow for your needs in retirement (a combination of retirement plans, annuities, personal savings and Social Security benefits).
- Your spouse will not struggle if you were to predecease him or her.
- You have little or no debt—including a mortgage.
- Your children are grown, in good health and are financially independent.
Do most or all of these statements apply to you? Congratulations! Chances are good that dropping your life insurance policy won’t hurt.
When SHOULD you consider keeping your life insurance policy?
- If you’re retiring with a lot of debt. If you die, your family will have to pay it off—and that’s not the best way for them to remember you.
- If you’re married and still working in retirement. Even if you’re only working 15 or 20 hours a week, you may want to keep your life insurance to protect your spouse from losing that income if you die.
- If you have a special-needs child. Make sure your coverage is sufficient for any ongoing care your child will need.
- If you want to leave money to your heirs. The proceeds your beneficiaries receive may be tax-free, if you plan correctly.
Depending on your goals, there are many different kinds of life insurance you can buy. Because of its complexities, it’s advisable to consult a financial professional. Not sure if buying (or keeping) life insurance is the right choice for you? We can walk you through your options and help you make the best decision. Click here to set up a no-cost, no-obligation meeting with one of our financial advisors.