life insurance for those who are near FIRE or are FIREd

[goateeman]

I carry about $1 million life insurance (cheap term policy).  Now that I have $1 million in net worth, I'm debating keeping my life insurance policy for a few more years or drop it altogether.  I got the policy 10 years ago, in my 30's, so it's fairly cheap.  It's time for annual renewal soon, about $1k annually for this policy. I'm not sure if it's worth it any more.

What's the consensus on term life policy when you are close to FIRE or post-FIRE?  Drop it or keep it?

[Paul der Krake]

Who are the beneficiaries?

[goateeman]

Who are the beneficiaries?

LOL my family, of course. Wife and teenager son.  Wife makes $30k per year, a fraction of what I make.  I already have $50k in s529 plan for my son's college, which should pay off 4 years of local college as well.

Should something happen to me, they will have $1 million in tax free benefits on top of our $1 million investments.  I'm not sure if this is worth $1k per year cash expenditure.

[Paul der Krake]

Sounds like you don't need it then.

Keep in mind that if you are paying into Social Security, your wife and son will be eligible for up to nearly $4k of monthly support until your son turns 19. Check your numbers at ssa.gov.

[Frankies Girl]

If you're FIRE, there's no need for life insurance. With 1 million in assets, you already have money for your dependents, and life insurance is not replacing your income if you're not earning anything.

Teenager should be out of the house and not need support in a few years anyway and and you have college expenses already figured out, and you don't need to pay for child care if spouse becomes a single parent.

Your wife works and makes enough on her own to support basic living expenses (30K is basic coverage in my area), so wouldn't need insurance to cover in that instance either since she could survive on her own without anything - but she has your nest egg in addition so literally no need to cover income/living expenses.

Unless you are very unhealthy, or drive/travel frequently enough to be a higher risk - then it sort of like you bought a lotto ticket that might stand a higher chance of paying out for "fun" money to your wife/kid. But that's all it is, and gambling is never really worth the cost in my opinion.

What does your wife think? If you both are in agreement, I'd ditch it. But if it helps her to sleep at night knowing there's a huge payout if she loses you, 1k might be worth the peace of mind for her.

[goateeman]

Sounds like you don't need it then.

Keep in mind that if you are paying into Social Security, your wife and son will be eligible for up to nearly $4k of monthly support until your son turns 19. Check your numbers at ssa.gov.

Thank you.  I was not aware of the social security support, that is a nice surprise.

This is another $1k of cash I can free up for other purposes... hopefully my wife will not be too disappointed that if somethings happens to me, she won't get $1 million tax free. :)

[goateeman]

If you're FIRE, there's no need for life insurance. With 1 million in assets, you already have money for your dependents, and life insurance is not replacing your income if you're not earning anything.

Teenager should be out of the house and not need support in a few years anyway and and you have college expenses already figured out, and you don't need to pay for child care if spouse becomes a single parent.

Your wife works and makes enough on her own to support basic living expenses (30K is basic coverage in my area), so wouldn't need insurance to cover in that instance either since she could survive on her own without anything - but she has your nest egg in addition so literally no need to cover income/living expenses.

Unless you are very unhealthy, or drive/travel frequently enough to be a higher risk - then it sort of like you bought a lotto ticket that might stand a higher chance of paying out for "fun" money to your wife/kid. But that's all it is, and gambling is never really worth the cost in my opinion.

What does your wife think? If you both are in agreement, I'd ditch it. But if it helps her to sleep at night knowing there's a huge payout if she loses you, 1k might be worth the peace of mind for her.

This is kind of what I was thinking, but I was afraid to cancel the policy because it can't be undone.  My wife will be disappointed not to get $1 million tax free if I croak... just kidding. 

She actually doesn't really care either way.  I think she feels pretty secure given how well of a job we've gotten to FIRE.  I'm more of a worrier than she is.  If I die, I don't need to worry about what happens to me... but I do worry about them quite a bit.  So it was more for me to sleep better at night.  Now that I have the $1k renewal coming, I'm thinking why not put it to better use?

The one concern is, she doesn't really want to manage finances, and she has zero interest in investing or money management.  I really wish she would do more to learn about this topic but she's happy to let me do it all. So if she were to start managing this money it would be very hard for her.  I've got some family / friends who can advise her, but still it won't be as easy for her.