24 Sep Should we give up our life insurance policies?

Q. My youngest kid is almost done with college which means I’m almost done with tuition bills. My wife and I have a small mortgage on the house and we both work. I’m thinking of giving up our life insurance because we don’t really need it anymore and we both have policies through our jobs. What do you think?
— Still working

A. First, congrats on being done with the tuition expenses.

Let’s look at whether continuing your personal life insurance policies would make sense.

Having company-sponsored life insurance is great, said Ed Gaelick, a Chartered Life Underwriter and Chartered Financial Consultant with PSI Consultants in Glen Rock.

But what happens when you stop working or the group policy is cancelled for some reason? What are your options then?

Before cancelling any personal life insurance, he recommends you investigate your options with the employer policies if you leave the job.

If there are no continuity or conversion rights, you may want to keep your personal policies in force, he said.

You may not “need” those policies but you may “want” them to make things a bit easier for your family financially should either one of you die.

“The fact that you only have a small mortgage left on your house shouldn’t be the litmus test on whether to keep these policies or not,” Gaelick said. “There will be other expenses and the benefit will replace some of the deceased’s income.”

Part of your decision should also be based on the kind of insurance policies you’re talking about. For example, are they term insurance or some kind of permanent policy that builds cash value?

“There are many types of cash-building policies, each with its own characteristics,” Gaelick said.

Also consider if you and your spouse are both insurable and what kind of premiums you would face if you canceled and then decided to get new policies.

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This story was originally published on Sept. 24, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.