A life insurance policy is a contract between an individual and an insurance company in which the company guarantees to provide a payout to beneficiaries after death. Life insurance can give profound peace of mind to people who have families that depend on them financially.
At a certain point, however, you may find that you no longer need to find or maintain a life insurance policy. Perhaps:
- You are retired.
- Your surviving family is not dependent on your income.
- Your mortgage is paid in full.
- You are single and financially independent.
If any of these situations apply to you, it could be time to reevaluate your life insurance policies. Read more below about how each of these situations can impact your decision.
You May No Longer Need Life Insurance If You Are Retired
If you are retired, you’ve probably planned, saved, and made a number of intentional financial choices up to this point. Chances are you’ve always carried a life insurance policy individually or through an employer until this point too. But do you need to maintain that life insurance policy? If you no longer work a job for outside sources of income, probably not.
Remember that the purpose of life insurance is to make sure that your income is replaced in the event of your untimely death. If you are living on your retirement savings and social security, you won’t actually have any income to replace. However, do be sure to set up beneficiaries of your retirement account so that your loved ones can still gain access to your hard-earned savings.
You May No Longer Need Life Insurance If Your Family Doesn’t Depend on Your Income
If you have a spouse, it’s likely you purchased a life insurance policy when you got married or purchased a home together. You wanted to be prepared in the event of sudden loss of income – whether working for an employer or self-employed – that could cause financial hardship.
If you have kids, you may have purchased a life insurance policy when they were born. You wanted to make sure that their caregiver could afford to take care of them even if you weren’t able to. You may even have wished to help to support them through college until they could become financially independent.
But let’s say you and your spouse were savvy enough to be able to build up a significant savings of your own, and that your once-new baby has grown into a young adult who can now provide for themselves. Your need to carry a life insurance policy is no longer a necessity for their well-being.
Consider this: Can your family make ends meet without a significant impact on their lifestyle? If so, you may no longer need to carry life insurance.
You May No Longer Need Life Insurance If Your Mortgage is Paid in Full
One of the most significant expenses that many families face is the cost of housing. Ranging from hundreds to thousands of dollars, the monthly amount due on a mortgage usually necessitates careful budgeting. And, oftentimes, the mortgage payment takes priority over all other bills.
One of the main motivating factors for purchasing that life insurance policy in the first place is to ensure your family has a place to call home after your death. No one wants their spouse or children becoming homeless because they can’t afford to pay the mortgage.
Luckily, mortgages don’t last forever. When you’ve paid off your mortgage and your family owns your home outright, that huge financial burden is off your plate and you no longer have to worry about where your family will live after you die. If that’s the case for you, 1) congratulations! and 2) you may no longer need to carry a life insurance policy.
You May No Longer Need Life Insurance If You Are Single & Financially Independent
Is it worth paying every month for a life insurance policy if no one is going to benefit from it? Probably not.
If no one is relying on you financially or, in other words, if you are single and financially independent, you may not need to purchase life insurance at all. Or if you already have a life insurance policy, you may be able to consider dropping it.
If you do fit into one of these categories, contact one of our local agents to make sure your ducks are in a row before you cancel your life insurance policy. Life insurance can be expensive and difficult to gain later in life. We can help you make the right choice for you and your family.