A couple is questioning whether they should cancel a $500,000 life insurance policy on the husband, who is in his mid-60s. They currently pay $100 per month for the coverage.
The couple’s children are grown and financially independent. The pair also describe themselves as very comfortable financially, raising doubts about the policy’s necessity.
Financial experts often recommend reviewing life insurance needs as people move into retirement. The original purpose of replacing lost income or covering dependent expenses may no longer apply.
The decision hinges on whether the husband’s death would create a financial gap. If the couple’s savings and income streams can cover living expenses without the payout, the policy may be redundant.
However, there are scenarios where keeping coverage makes sense. The policy could help cover estate taxes, provide liquidity, or fund a legacy for heirs.
The monthly premium of $100 represents a $1,200 annual cost. This money could instead be invested or used to boost retirement income if the policy is no longer needed.
Experts suggest reviewing the policy’s cash value if it is a permanent life insurance policy. Term policies, by contrast, have no cash value and expire after a set period.
The couple should also consider health status. If the husband’s health has declined, replacing the policy later would be more expensive or impossible.
Ultimately, the answer depends on individual goals. Financial advisors recommend weighing the cost against the potential benefits and the couple’s overall financial plan.
