26 Jul Should I replace my term policy or let it lapse?

Q. I have two kids who will start college in the next few years. My term insurance will end when they are halfway through college. Should I get more? Or should I just let it lapse? I will still have $100,000 of coverage through my job.
— Mom

A. Many people buy life insurance policies to ensure that their surviving spouse and children would be financially taken care of in the event of your premature death.

You didn’t mention being married, so for now, we will assume you’re single.

To decide whether to get more insurance, you need to do an analysis to see what expenses you may want covered in the event of your unexpected death.

This could include the remaining college tuition costs for your children, but also other items, such as paying off a mortgage or just providing your survivors with the financial means they would lose if you died.

But the calculation should also take into account your other assets. For example, if you’ve set aside a lot of money in 529 plans, you may not need insurance proceeds to pay for these expenses.

If you don’t have extra assets and you want expenses covered, you may want to consider a term policy to cover those costs. Before you shop around, you should also see if you can increase your employer-sponsored policy, but make sure you understand what happens to that coverage if you leave your job.

Good luck in your calculations.

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This story was originally published on July 26, 2023.

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.