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My H is retiring soon and will be losing his employee life insurance. He says he's going to continue to work for another 10-15 years. He's been advised to get a 10 year term policy for 10 times his annual salary. He was told life insurance is for replacing lost income, not covering liquid debts like mortgages and car payments.

According to a few different longevity calculators I've used, his life expectancy is 81-83. Mine is 75. If he works another 15 years, he'll only be 70.

That got me thinking that maybe he doesn't need life insurance at all. If he dies before me, I will get his pension which will be abput 82k per year, his 401(k) ($350k), his social security, and possibly at least part of his VA disability. On top of that, I have a 401(k) (about 70k), an inherited IRA from my mother (350+k), and will inherit whatever is left of my dad's investments. We have 2 houses and 5 vehicles, all of which could be sold if I were in dire straits for well over $1 million.

I don't see why I would need to replace his lost income. All of our kids except one are adults. The youngest is 14, so only 4 years until he'll be an adult. I don't need to live lavishly. I just need enough to pay the bills and eat without worry.

Is life insurance necessary?

Doesn't sound like you'll need it and buying it this late in the game will be very expensive. Life insurance is to replace loss of income which is important in the earlier years but once you build up a sizable estate which you have then if he does unfortunately pass away early you will have enough financials in place to support yourself

WB, that is exactly what I'm thinking. Altho, it's not very expensive, only $150-$200 a month for $1.5 million. Don't get me wrong, that money would be nice if he died, but that doesn't seem likely. Then, the money is just wasted. It's not much, but seems to me we would be better served investing the money that would go to the life insurance.

I agree. It doesn't sound like you need it. The money would be better spent elsewhere.

My mom was telling me about a friend of hers (70+) who is paying for a life insurance policy. My mom advised her to cancel it. She's a single person with 1 grown son. Her son is married with 2 kids of his own. She has money saved to pay for any expenses after she dies. There's no need for her to have a life insurance policy.

With no children, I've never looked at having life insurance, since it seems to be intended for providing for survivors. But one thought too: if you did collect the full amount, I'm betting you would have to pay income tax on that amount in the tax bracket of someone who earned that much every year, just like when we sold my old house, the entire gain was taxed as income for that year like we had made about 5 times the normal annual salary. Something to check out.

Supresse,

Thanks for that. I hadn't thought of what taxes would look like. I'll look into it.

Just googled it and read that life insurance is usually not taxable for beneficiaries.

My F purchased a mutual policy from a specific company and an additional term policy that is still convertible. It has a long term care critical illness waiver, which he may shockingly end up using.

The policy has costs and benefits that one would need to carefully consider. But the additional money he puts in there is growing and can be borrowed against. It pays dividends. One can borrow against it.
I have heard arguments against these policies including that these policies have high fees. I was not in favor of the purchase. But sadly F is not the only healthy person that the agent has sold a policy to that has had a shocker event where this policy was a great resource.

She hawk, my H is opposed to a whole life policy. We both have been advised by several people that they aren't worth the cost. Plus, he says we couldn't afford one, anyway.

My one concern is long-term care insurance. It used to be offered through his current employer. They discontinued a few years ago so they could, supposedly, do a cost/benefit analysis. They have yet to bring it back.

My mother had a policy she ended up not using much of. She got pancreatic cancer and died relatively quickly.

My dad did not have long-term care insurance. He thought he'd die relatively young. He's still around at 86, and severely disabled. He has dementia, type 2 diabetes, NPH, and is wheelchair bound. He's paying almost 10k a month for memory care in an assisted living facility.

He has too many assets to qualify for any assistance. It all comes from his investment accounts, which will most likely be completely depleted. His mother lived to be something like 103.

I don't know the current status of long term care policies, but I know that my in-laws signed up for a policy in the early 2000s, paid into it for ten years under the promise that it could never be cancelled, and then received a notice that while it wasn't being cancelled, the anticipated payout had been dramatically reduced. This was with a major insurer, not a minor player in the industry. My FIL was talking to other people about a class action lawsuit when he died suddenly of an undiagnosed medical condition. My MIL was too grief-stricken to pursue the legal issue, but it soured her on long term care policies. I guess I'm not surprised that your H's employer never brought them back as an option.

I agree that you don't need life insurance when you have sufficient income and no debts.

I would not suggest any life insurance w/ long term care riders. Premiums continually increase and often don’t meet your needs. Exclusions and riders often don’t pay the $ you expected it to cover.

Do not buy insurance as an investment vehicle. You can do better investing the $ on your own. You may be able to borrow against it but that’s a whole other headache.

Have you investigated the potential premiums? They may be prohibitive. We had a 20 year term on my H and at the end of term the premium jumped to $21,000 per year and my H is/was healthy. And he was only in his 50s.

You might want to look at a term policy until the youngest is out of college if the premiums are reasonable. You can always cancel it once you don’t need it.

We're not considered whole life insurance, only term. I don't think we need it even for the youngest and college. He has his GI Bill and the others have all gotten financial aid.