Who needs life insurance?

Question

At what point in life should one stop buying term insurance?

Answer 1

This all depends on your specific situation and how you are doing financially.  I am sorry but there is no blanket answer for this.

If you are young it is cheap so if you can spare you should get it then so it can be paid off in time.  If you are not able to do it then at least try to get some of your benefit in permanent.  It does get extremely expensive when you are older but who is to saying you are not making $200k a year at that point.  Like I said it depends on your situation.  

I suggest you speak with an advisor, be careful who you go to b/c they may try to sell you something you don't need once you mention the words permanent life insurance.  I suggest meeting with a CFP they will advise you with what is best.  If you have any question don't hesitate to let me know.  This can be a very tricky thing.

I am a CFP myself and help clients with this all of the time but like I said be careful who you talk to, if used improperly it can be bad.  You may need to put the money to other things.  As long as you can have enough to take care of your debts and burial you are better off then most.

Answer 2

There is no simple answer really, but assuming you don't need coverage for tax purposes, to leave to a charity, etc... you can assume that you don't need insurance if you could also retire off of your savings.  Meaning (in general terms) if you didn't need to work anymore then you wouldn't need to replace your income for a family, because you would have already accomplished that.

Answer 3

When you no longer need to provide additional, immediate liquidity at your death.  Or when you have a permanent life insurance need (or one term insurance won't cover) AND it makes sense to you because of cash flow and your cost of money.

If you want to talk with someone in person about this, don't just find a CFP, find one who is also a "fee-only financial planner".

Answer 4

It all depends, do you have a wife and/or children that will need to be taken care of?  I would say that if the loss of your income would cause your loved ones hardship then you should have insurance.  Generally a person should be insured to a degree that the returns on the life insurance pay out should be close to ones annual income.  If your older and kids have gone, your debts and house are paid off and you have money to take care of your wife then you wouldn't need to worry about insurance.

Answer 5

When your liquid assets meet or exceed the amount of your term policy, you don't need the term coverage any more.