Author Topic: Life Insurance approaching FIR?  (Read 1672 times)

albireo13

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Life Insurance approaching FIR?
« on: October 25, 2017, 04:34:36 AM »
Am 61 and approaching retirement (2 yrs)
I've always carried life insurance, 4x salary.
Am thinking I should drop it entirely.
Does anyone else keep life insurance into retirement?
a dumb idea?

chasesfish

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Re: Life Insurance approaching FIR?
« Reply #1 on: October 25, 2017, 04:38:14 AM »
I'm 35 and have already scaled mine back to what's free for work.  Id' say if you have 20-25x your living expenses, go ahead and drop it.

smallstache

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Re: Life Insurance approaching FIR?
« Reply #2 on: October 25, 2017, 04:39:22 AM »
Not unless you have a source of income, such as a pension, that (1) is only payable during your lifetime and (2) your spouse and/or children depend on.

Otherwise, if you have enough assets for you, your spouse, and/or children to live off of, then you should have enough for just your spouse and/or children.

Need2Save

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Re: Life Insurance approaching FIR?
« Reply #3 on: October 25, 2017, 08:16:09 AM »
Nope. Not planning to keep life insurance into retirement.  Life insurance is for the living, not the dead. If your immediate family (most importantly your spouse or SO) would have adequate assets to keep up their current lifestyle if you died, than life insurance is not needed.

I literally just canceled a supplemental life policy I had outside work this week and they tried to convince me that I needed it.  Actually I don't.  I'm covered by 4x as much as that policy through work and I am quite comfortable that when I retire in 5 years I will no longer be concerned about 'replacing my income' for my spouse. He would use the remainder of our joint assets and live a quite cushy end of his days and vice versa.

I think there is basically a bell curve to when life insurance is appropriate.  You don't really need it early in your career when you are single and there are no dependents relying on your income. Then you get married, have kids or what-have you and then you do.  People are relying on your income to live and save for the future.  Then the closer you get to retirement (presumably if you have saved and retired any debt that you may have) the less you need it until ultimately you don't need it at all if you plan for it.

Agree with smallstache though if there is a pension benefit or some other income stream that is tied to one person's life and there is no survivor benefit for the other, maybe life insurance is something you want to evaluate.

NeonPegasus

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Re: Life Insurance approaching FIR?
« Reply #4 on: October 25, 2017, 08:23:02 AM »
Nope. Not planning to keep life insurance into retirement.  Life insurance is for the living, not the dead. If your immediate family (most importantly your spouse or SO) would have adequate assets to keep up their current lifestyle if you died, than life insurance is not needed.

I literally just canceled a supplemental life policy I had outside work this week and they tried to convince me that I needed it.  Actually I don't.  I'm covered by 4x as much as that policy through work and I am quite comfortable that when I retire in 5 years I will no longer be concerned about 'replacing my income' for my spouse. He would use the remainder of our joint assets and live a quite cushy end of his days and vice versa.

I think there is basically a bell curve to when life insurance is appropriate.  You don't really need it early in your career when you are single and there are no dependents relying on your income. Then you get married, have kids or what-have you and then you do.  People are relying on your income to live and save for the future.  Then the closer you get to retirement (presumably if you have saved and retired any debt that you may have) the less you need it until ultimately you don't need it at all if you plan for it.

Agree with smallstache though if there is a pension benefit or some other income stream that is tied to one person's life and there is no survivor benefit for the other, maybe life insurance is something you want to evaluate.

+1

DH and I have life insurance to support our young kids should we pass. Our policies will expire by the time the youngest is 20. That is plenty long. By then, no one will need to support the kids and DH and I will have enough money that the kids' inheritance will be more than sufficient to help them finish college and get an amazing jump start on their lives.

terran

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Re: Life Insurance approaching FIR?
« Reply #5 on: October 25, 2017, 11:02:10 AM »
Will there be a loss of income or increase in expenses for your spouse and/or children if you die? Can your current portfolio absorb that loss or increase at a safe withdrawal rate you're comfortable with? Once you can answer "no" to the first question or "yes" to the second I would drop life insurance, but not before.

albireo13

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Re: Life Insurance approaching FIR?
« Reply #6 on: October 26, 2017, 05:01:36 AM »
I've got < 2 yrs to go before I retire so am thinking of carrying it at least for now.  I'll scale back from the supplemental and just keep the 1X that is company paid.

Dee18

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Re: Life Insurance approaching FIR?
« Reply #7 on: October 26, 2017, 07:49:08 AM »
As many have pointed out on other threads, in the US survivor benefits can be quite substantial from Social Security.  People often do not even know about those and needlessly carry life insurance longer than they need to.

smallstache

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Re: Life Insurance approaching FIR?
« Reply #8 on: October 26, 2017, 02:35:39 PM »
Notwithstanding my earlier comment, I have two dirt cheap, paid up, whole life insurance policies. The cost of the insurance portion is about $11/mo for ~$253k in coverage. In addition, the cash value portion pays 6% tax-deferred interest at an expense ration of about .2%, which goes down every year. I can cash out the interest tax-free if used for long term care.

There were no expensive commissions or brokerage fees. Just a tradeoff--lower return on the premiums than stocks in return for guaranteed income. These is basically our emergency funds.  They supplement our portfolio of stocks and rental properties.

The MMM community crucifies me every time I mention my whole life policies, but oh well.


Timmm

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Re: Life Insurance approaching FIR?
« Reply #9 on: October 26, 2017, 04:04:54 PM »
Letting our last term policies lapse was a satisfying milestone for me earlier this year. It wasn't really tied directly to finances - it had been cheap 10 year term that probably could have been canceled a little earlier, but was locked in to a good price. I've still got a policy via work for 1x salary.

We had rolling 10 year policies that basically matched our kids dependent years, and expanded and contracted roughly following our income/expenses vs savings:
Year 0: smallish policies
Year 5: add bigger 2nd policies
Year 10: Replace smallish policies with the last and biggest
Year 15: 2nd policies lapse
Year 20: last policies lapse

But while we are still providing lots of support for our kids, they're adults now, and the nest egg is close to very safe FI. If either of us were to expire, that would probably simplify and reduce expected medical expenses more than enough to make an insurance payout unnecessary.