The reason for my post is when I have reviewed the final numbers of the annual spending of FI people like MMM and the Madfientist, there is no place for anything like this. I thought for sure you would all tell me to get rid of it.
Ok since I have you engaged on this, how about this one. My wife had a business that we closed last year. Because of her income in that business, I insured her life for about $1.25M. Now she isn't working but may go back to work at some point. We don't need her income and should something happen to her, though a terrible tragedy it would be, a financial loss it would not be. Do you agree that I should let her policy go (lapse)? Thanks.
I don't think I completely have the hang of this yet but it appears that the basic principle is to eliminate absolutely everything possible. (Don't know how I'm going to live without my iPhone 6s Plus). Thanks.
Term life insurance is necessary if you have dependents. Mad FIentist doesn't have dependents (his wife is financially independent from him and he from her if I'm remembering it correctly). MMM is married with one kid, but doesn't have term life to my knowledge because he doesn't need it (might be wrong tho - he's young enough to have gotten a decent price for enough to cover through MMM jr's college easily and cheap). In both cases, they and their spouses are completely capable of supporting the family in the event of losing the other. That, coupled with a huge ass stash of investments mean they are "self insured" (their investments are large enough to carry them in the event of a loss of a spouse) and both cases, all of them can go back to work full time in the event that they lost the other one. They don't need insurance in that case.
If you wife is not providing needed income, child/house care or otherwise vital day to day support functions, then she doesn't need to have life insurance. The reason anyone should have life insurance (term) is because you have to replace lost income until such time that the kids are independent and the spouse is able to support themselves, or because you need to hire caregivers to take care of minor children or other life necessities. If you would not need to hire a nanny and could mostly keep up with your house on your own without her, then no, she doesn't need life insurance to replace her in the event of her death.
(this is not to say that she is not a vital member of your family, or that you and your kids wouldn't be emotionally devastated by her loss, just coming at it from purely a monetary/insurance angle).