21 Jul The kids are in college. Do we still need life insurance?

Q. My wife and I each have $500,000 term policies that will end in about a year. We still have two kids in college. Should we get new policies just in case? We’re 54 and 57 so it will be more expensive this time and we don’t want to waste the money.
— Dad

A. It sounds like you have term life insurance policies.

These have an expiration date.

Now that you’re 54 and 57, new term insurance will certainly cost more than your original policies because you’re older, said Ed Gaelick, a Chartered Life Underwriter and Chartered Financial Consultant with PSI Consultants in Glen Rock.

He said term insurance has no value unless you die.

“Term is a lower premium than a permanent plan such as whole life because the odds are you’ll outlive your term coverage,” he said. “Whole life is permanent so you never have to revisit this, like you are now.”

With a permanent policy, the coverage would be there when you needed it and you’d be building value within the policy, he said.

“So when you say you don’t want to “waste the money,” chances are you will with term — but the protection is important,” he said. “Whole life won’t be a waste since you’d build value that may eventually exceed your total outlay.”

Your situation is quite typical because people can plan to be protected to some target date but life can change, requiring extended protection. And then you’d need to contemplate whether you should apply for new coverage and hope you’ll qualify now, he said.

“If the goal is to protect your children’s education only, then purchase term for a few more years,” he said. “And yes, you should, just in case.”

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This story was originally published on July 21, 2020.

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