When did you dump your life/disability ins?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
coalcracker
Posts: 390
Joined: Sat Feb 04, 2012 12:25 pm

When did you dump your life/disability ins?

Post by coalcracker » Fri Feb 07, 2014 7:33 am

Quick background:

Married
1 child (with possible additional in intermediate-term future)
mid-30s

We are about 20% to our retirement nest egg number, with the anticipation we can be at our number in 10-12 years if things go as planned. I was wondering when to think about dropping our 30 year term life and individual disability policies. These cost us about $800/month, which I consider money well spent, but I would rather not spend it if I don't have to :D

For life, does it make sense to drop then when my wife and my policy together = our nest egg amount? This would be in about 5 years time. However, these policies do not cost me much, so should I just keep them until the end of the 30 year term (when we are 60)?

For disability, I am thinking I would keep it basically until I have hit my number.

Interested to hear how other have approached this?

livesoft
Posts: 62328
Joined: Thu Mar 01, 2007 8:00 pm

Re: When did you dump your life/disability ins?

Post by livesoft » Fri Feb 07, 2014 7:42 am

When the question, "Would the financial lives of my spouse and my children change if I died?" was answered with a No, is when we didn't need life insurance.

The answer to that question was always No for each of us, so we never bought life insurance.
Wiki This signature message sponsored by sscritic: Learn to fish.

Rebecca_S
Posts: 172
Joined: Sat Oct 06, 2007 6:55 pm

Re: When did you dump your life/disability ins?

Post by Rebecca_S » Fri Feb 07, 2014 8:01 am

These are 2 separate questions.
My husband and I have about equal earning potential and low expenses, no kids, so we don't have life insurance.
Disability insurance is a much bigger deal, you are more likely to need long term disability than to die early. The consequences could be much greater financially. We have disability insurance.

User avatar
yatesd
Posts: 533
Joined: Sun Nov 03, 2013 8:19 am
Location: MD

Re: When did you dump your life/disability ins?

Post by yatesd » Fri Feb 07, 2014 8:09 am

You should check into 15 or 20 year term insurance instead. Most of your insurance rate is going towards the last 10 years...so if you are thinking of not going full term, then change now. It might save you some money and it sounds like risks will be minimal. I pay $270K annually for $500K (15 year term). I also have about $250K through work.

I wouldn't tend to dump disability as quickly.

traineeinvestor
Posts: 498
Joined: Wed Nov 26, 2008 8:52 am
Location: Hong Kong
Contact:

Re: When did you dump your life/disability ins?

Post by traineeinvestor » Fri Feb 07, 2014 8:20 am

Once we decided I had enough to retire, by definition we did not need life insurance - if there is enough to support myself and my family while I am alive there should be more than enough to support my family without me. At that point, it was just a wasteful expense. There is no inheritance tax out here.

jebmke
Posts: 8281
Joined: Thu Apr 05, 2007 2:44 pm

Re: When did you dump your life/disability ins?

Post by jebmke » Fri Feb 07, 2014 8:34 am

I dropped life insurance when I no longer needed it.
When you discover that you are riding a dead horse, the best strategy is to dismount.

Grt2bOutdoors
Posts: 19079
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: When did you dump your life/disability ins?

Post by Grt2bOutdoors » Fri Feb 07, 2014 8:59 am

I would not drop the life insurance if any of the below applies:

1) you want to pay for college, you don't have the funds yet for 4 years worth, let alone 8 if you have child #2
2) you want to leave a reasonable estate to your offspring
3) you have mortgage debt, credit card debt, business debt
4) you want your surviving spouse and offspring to continue as before lifestyle wise for an undetermined amount of time (years) without having to whip out a calculator and figure out how long it could continue before the "nest egg" dissapates into a much lower figure.

I know the purpose of life insurance is not to make one "wealthy" or "rich", but if you bring in 50% of the income and save 1/2 of it today, your family will not realize those earnings if you are gone. Let's say you make $50K net today, you are age 35 and planned to work until age 60 - that is a minimum net earnings of $1,250,000, you save 1/2 of that - $625,000 - invested it could grow to $1,500,000. You drop your insurance, you get hit by a hit and run driver - no insurance claim you can't find the perp, all your family has is Social Security and your nest egg. No earnings, means no ability to invest, leave estate, etc. I don't work for the life insurance industry, but either you have very large insurance policies (term) or possibly health issues that lead you to pay that much in monthly cost. $9,600 for life insurance? or is most of that cost related to disability?

Disability insurance - don't drop it until you no longer need your income to pay bills. That is, if you aren't financially independent, then you should continue to keep it. Social Security disability may not be enough if you have debts to pay.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

GadgetBoy
Posts: 20
Joined: Sun Jan 26, 2014 12:12 am

Re: When did you dump your life/disability ins?

Post by GadgetBoy » Fri Feb 07, 2014 12:56 pm

yatesd wrote:I pay $270K annually for $500K (15 year term).
That's a heckuva premium... :-)

User avatar
yatesd
Posts: 533
Joined: Sun Nov 03, 2013 8:19 am
Location: MD

Re: When did you dump your life/disability ins?

Post by yatesd » Fri Feb 07, 2014 1:23 pm

GadgetBoy wrote:
yatesd wrote:I pay $270K annually for $500K (15 year term).
That's a heckuva premium... :-)
I believe I used Accuquote http://www.accuquote.com (recommended by Kiplinger's). I was 35 (43 now). I went with Prudential which had a high rating and the lowest price.http://www.investor.prudential.com/phoe ... ol-ratings

GadgetBoy
Posts: 20
Joined: Sun Jan 26, 2014 12:12 am

Re: When did you dump your life/disability ins?

Post by GadgetBoy » Fri Feb 07, 2014 3:12 pm

yatesd wrote:
GadgetBoy wrote:
yatesd wrote:I pay $270K annually for $500K (15 year term).
That's a heckuva premium... :-)
I believe I used Accuquote http://www.accuquote.com (recommended by Kiplinger's). I was 35 (43 now). I went with Prudential which had a high rating and the lowest price.http://www.investor.prudential.com/phoe ... ol-ratings
Perhaps you missed my chuckle...

You are paying $270,000 annually for a $500,000 policy?

User avatar
yatesd
Posts: 533
Joined: Sun Nov 03, 2013 8:19 am
Location: MD

Re: When did you dump your life/disability ins?

Post by yatesd » Fri Feb 07, 2014 8:38 pm

GadgetBoy wrote:
yatesd wrote:
GadgetBoy wrote:
yatesd wrote:I pay $270K annually for $500K (15 year term).
That's a heckuva premium... :-)
I believe I used Accuquote http://www.accuquote.com (recommended by Kiplinger's). I was 35 (43 now). I went with Prudential which had a high rating and the lowest price.http://www.investor.prudential.com/phoe ... ol-ratings
Perhaps you missed my chuckle...

You are paying $270,000 annually for a $500,000 policy?
Ha Ha. :oops: missed that one! Yeah...$270K isn't a good deal...$270 a year is much better :D

Post Reply