Deciding when to drop life insurance is an individual matter and varies depending on your circumstances. As you age, the cost of life insurance increases so that paying the premium every year can become a burden if you are on a fixed income. Some of the things to consider include the following:
- Are your children grown and on their own with sufficient income that they don’t require any money from you?
- Are your funeral and burial costs prepaid, or will there at least be enough money in your estate to cover them?
- If you are married, and you die first, will your spouse have enough income to live comfortably?
- If you give up the policy, it will be more expensive to buy another one when you are older. In addition, if you develop health issues in the meantime, it may be impossible to get another policy.
- If you decide to keep your policy, perhaps you could reduce the coverage as you get older.
- Do you or someone in your family have serious medical problems which may cut into your savings?
- If you have a whole life policy, instead of a term policy and you are getting a good interest rate, it may still have value as a savings plan.
- If you need advice, try to meet with an independent financial adviser, even if you have to pay a fee. No matter how much you like your insurance agent, his job is to sell insurance, and therefore he may not give you an impartial opinion.
- One more aspect of this is your estimated life span. Face it, some families die young so it might make sense to keep the policy. Other families live a long time, so maybe it might make sense to let it go. It is a little like a bet on how long you will live. Die young, you win.