Is it time to cancel term life policy? Change to Long Term Care?

[soulpatchmike]

We have maintained term life policies of 500k for DW and 1M for me over the last 20+ years.  The annual draw is scheduled for next month and not sure if we should cancel DWs policy.  It just dawned on me that the reason we got her policy in the first place was for when the kids were small to cover what might be needed to cover her being missing until they are done with school.  DW hasn't worked outside the home in 22 years so we wouldn't need it to replace income.  Our youngest kids are now 13 and 15 now, and I can't foresee what additional costs I couldnt swallow that would arise if DW was gone between now and FIRE in 2030 when I plan to drop my own policy.

Any thoughts out there?  It probably sounds like my mind is already made up, but I am actually not sure what to do.  It will auto-pay renew if I don't do anything.

[partgypsy]

Ex and I got term 20 year policies (for less than those amounts).it is an annoyance but I feel better having in place, until the 20 year term runs out. I'm not going to renew it. Not going to cancel either, as if I changed my mind and wanted it back, the price per month would be sig higher due to age etc. it sounds like you might want to look at whole financial picture and see where the life insurance fits in (if at all). Even though the kids arent little is your job flexible enough to take all the time off what wife does for the kids and household?

[Laura33]

What would it take to hire someone to do what your wife does for the household?  Or what would it cost you to cut back on work to take care of all of that yourself? 

The monetary value someone provides isn't just limited to salary and daycare, so don't limit your analysis to those two obvious things.  Try to figure out what daily life would actually be like if your wife wasn't there and you were doing all of it -- transporting kids, handling groceries/meals, cleaning/managing the house, whatever all the other little things are that mostly go unseen.  Then figure out what would have to give if you had to do all that yourself -- which would you outsource, which would you cut, which would you need to take on yourself, and how would that affect your own ability to work at the same level you are now?  Make a decision with all of that in mind.

[TimCFJ40]

If something happened to either one of you (or both) and the assets you have would make it where the remaining parent and the kids would be just fine, then cancel the policy.  If not, either renew it or shop it.

I'm assuming it's term insurance, if it is whole life cash it out and get 5-10 year term to get you to the point where your assets would cover the passing of either or both of you.

We have another ~10 years left on the $1m 20 year term policies we took out on each other right before our oldest was born.  We're close to where we wouldn't need them but they're cheap (like $600/year) so we'll probably keep them on for a while.

[wageslave23]

Insurance is for something you can't afford if it happens.  If your wife died and you couldn't afford the financial impact, then continue the insurance.  It's sounds like it wouldn't be a financial catastrophe.  You would maybe outsource some things like cooking and cleaning, or pay your oldest to drive your youngest around. But those added expenses would be manageable and you could always work an extra few months presumably to offset.  The odds are small that it happens and the insurance company is in the business of making profits.

[Ron Scott]

The original reason for the policy and its auto-renew feature are irrelevant. Always rethink from scratch.

[soulpatchmike]

Thanks all.  Pretty sure its time to let DWs term policy lapse.

Any thoughts on long term care insurance at 50?  Not that I want another premium to pay, but has anyone done research on probabilites we would need it? I had an insurance guy tell me it was something like 30% of people need long term care.

[Arbitrage]

I cancelled mine when we were right around our original FI goal.  We actually weren't quite there yet, but I became aware of how much social security survivor insurance was going to pay my wife and kids if kicked it, and with that she would've been so far beyond the FI goal that it didn't make sense (to me) to keep throwing away $500 every year. 

DW never got a life insurance policy, as the insurance policies consider her to be high risk based upon a previous health condition and charge ridiculous premiums.  Never mind that the health condition is completely resolved.

[lhamo]

We also never bought life insurance policies for ourselves -- once I looked into it, it was complicated because we were expats (many companies will not issue policies for expats), plus our SS survivor benefits + the stash would have been plenty for either surviving spouse or guardian of kids to live it up at levels above what we were then spending.

I personally am not getting long term care insurance because most policies seem to cost so much in the lead up to needing them that and then become so hard to cash in on that it is probably easier/more reliable just to keep a nice hefty stash.  I personally am planning on aid in dying if my quality of life tanks as a senior due to illness, etc.  If it's not allowed in my case I'll probably just go camp somewhere isolated and let nature take its course.  YMMV.

[Must_ache]

Having met my $1.5M retirement goal (actually $1.6M now) I cancelled 10-yr term life insurance with 2 or 3 years yet to go.  It has served its purpose.

[Catbert]

We also never bought life insurance policies for ourselves -- once I looked into it, it was complicated because we were expats (many companies will not issue policies for expats), plus our SS survivor benefits + the stash would have been plenty for either surviving spouse or guardian of kids to live it up at levels above what we were then spending.

I personally am not getting long term care insurance because most policies seem to cost so much in the lead up to needing them that and then become so hard to cash in on that it is probably easier/more reliable just to keep a nice hefty stash.  I personally am planning on aid in dying if my quality of life tanks as a senior due to illness, etc.  If it's not allowed in my case I'll probably just go camp somewhere isolated and let nature take its course.  YMMV.

I similarly skipped getting a LTC policy.  They are expensive and the premium really ramps up with age.   Policies bought back in the 70s and 80s turned out to be a good deal for many customers bc that generation lived longer and spent more time in care facilities than originally expected by insurance companies.  I believe many insurance companies have quit writing new policies because they turned out to be unprofitable and difficult to price correctly.

In my city memory care could easily cost 10K a month.  I'm still glad I never opted to get LTC insurance since I have sufficient assets to pay that if it becomes necessary.