Cancelling Out

Anna can put more money against her house note if she cancels some life insurance policies, but at her age, is it the right thing to do?

QUESTION: Anna and her husband are retired and owe $46,000 on their home. She is 65 and her life insurance policy is $173,000. Her husband is 82 and has another life insurance policy for $50,000. They have $800,000 in variable annuities. If she cancels her 2 life insurance polices, she can add $10,000 against her note a year. Is it worth it to cancel?

ANSWER: Any time you buy life insurance, you are buying a bet against death. At 82 and 65, you probably won’t get any more insurance. If you get rid of it, you’re going to be without it. If you have enough money without the insurance to be all right, then you are self-insured. You have enough and don’t need the money. You aren’t depending on the money.

Keep the right amount of health insurance because a hospital stay can eat your savings alive. Make sure that you have long term care insurance. You are self-insured and can cancel those life insurance policies, but the downside is that as soon as you cancel and save $1,000 on him, and he passes away 2 years later, that $2,000 in savings that you have cost you $50,000.

I don’t mean to be cold, I’m just telling you about what we’re discussing. Overall, though, if you cancel them you’ll be find because you’re self-insured.