Term life insurance - keep or not?

This is a regular term policy, not a credit life insurance policy. We don’t have a mortgage or other loans, other than on an investment property which is only 145k so it would make no sense to have a credit life insurance policy or to use a term policy for this at least in our case and getting another policy just complicates things further as opposed to trying to make our estates less so. Not to mention my husband doesn’t own the investment property anyway, I do, so it makes things messy. I guess maybe for other people that might work if they don’t have the assets to cover the mortgage, but on a secondary property in this case if the mortgage couldn’t be paid it would be just as easy to sell since we aren’t living in it. I know, not everyone has that luxury.

Credit Life policies are very expensive decreasing death benefit term life insurance.

Many transactions agreements call for life insurance death benefit protection. As tie in sales are often prohibited, one is free to assign all or part of the death benefit of an existing policy to satisfy contractual requirements. An existing policy issued at standard or preferred rates gives one tremendous cost savings typically.

I would rather not pursue this discussion further as it either resonates with you or it doesn’t. My point is: An existing standard or preferred rate life insurance policy can be used in many situations in an efficient, low cost, flexible manner.

P>S. Just because the primary reason for having purchased a life insurance policy no longer exists does not mean that the existing low cost life policy is useless.

Never encountered any life insurance requirement for a first mortgage on an owner occupied residence with <= 80% loan/value.

Obviously, there are cases where households living in a house with a mortgage loan would want life insurance on those earning the labor income being used to pay down the mortgage, so that death of someone and consequent loss of labor income would not mean having to lose or sell the house.

In the context of these forums, when parents cosign student loans, the parents and student may want to have life insurance policies on each other.

Think about your motivation for holding the policy, which may guide your decision. Traditionally people buy term policies to protect someone (family, ex-wife, etc) should the policyholder die. The ex-wife no longer is entitled to the coverage and it sounds like you don’t need it either. So now the decision comes down to $1,100 per year and if you could do something better with the funds. $600K is nothing to sneeze at should the unfortunate occur, but is it worth giving up the certainty of the $1,100 for several more years on the chance the policy pays? Only you and your husband can decide that.

$1,100 won’t go far for us, but May-Sept just seem to be the killer months. Home insurance due, property taxes, car insurance, 2 term policies, and whole life policies.

As a suggestion, there is one policy you haven’t mentioned that may be a better use of $1,100 (probably less). Do you have an umbrella policy? Umbrella policies sit on top of your regular homeowner and auto policies. Even an auto policy with generous limits may only provide $250K in protection. Some states allow someone to sue even if they are partially at fault. Say you’re in a car accident where the other person can no longer work. If they sue and convince a court you are let’s say 1/3rd at fault your liability may still exceed your auto policy. An umbrella policy starts at $1 million and can go to several million in coverage. Also an umbrella feature worth looking for but harder to find is under/uninsured coverage. Someone at fault hits me with the Calif minimum liability coverage of $15K, that isn’t going to go very far. My auto policy has under/uninsured coverage but an umbrella can add $1 million on top of that.

Haha, I have forgotten about umbrella insurance. We do have the max car insurance coverages, and did have an umbrella policy which was dirt cheap -only a few hundred dollars if I recall, but my husband had 3 car accidents in just over 6 months and we got dropped from our umbrella policy. That was however now that I think about it, between June 2013 and late Jan 2014 so the accident is clearly off his record so maybe we can get it again. The kids are not small anymore so at least we don’t have to worry about them having a small friend over and getting injured on our property.

With regards to other reasons to have umbrella insurance, I assume there can be a large judgment but the person receiving the judgment can only get what the person can pay, so if the person has no assets, or the assets are protected, then they wouldn’t get paid above what insurance coverages there are anyway, correct?

Why have a judgment hanging over your head ?

Varies by jurisdiction, but judgments can be enforced any time over a period of many years unless extinguished in bankruptcy.

An unsatisfied judgment also has an adverse effect on one’s credit & on one’s ability to purchase a home or get a security clearance if needed for work.

Well, technically if someone has no assets or has good estate planning, it doesn’t matter that there’s a judgment hanging over their head in many cases. There’s a likelihood it can never be collected.

I was only asking about it. We have hefty coverage already so I’m not really worried about it. It’s easier to leave it between the insurance companies to wrangle over than to get involved. The bigger issue really is when someone’s in an accident with someone that has no insurance when that’s the law, or not enough coverage and someone is injured and we definitely don’t want that. Even having 4 kids from 18-24 and putting them on “away at school” coverage, I’ve always made sure they are still allowed to drive our cards and that the cars are covered. They know they are with our insurance, but some people tend to remove their kids completely when they go to school and for that I don’t understand.