[USER]

Can I consider myself self insured? Would you cancel your life insurance policy if you were in my shoes?

I’m 39f, my husband is 44m and our child is 8 years old. We own two businesses that are fairly hands off and run by managers. One is a service business, the other is a real estate rental business.

Including the real estate holdings, but not including the service business, we have 2.5 million dollars invested between the real estate holdings, the stock market and a few commodities.

We are 9 years in to 30 year term life insurance plans. I am insured for $1 million and my husband is insured for $500,000. We pay $2,216.74 per year total for our premiums. Our house is paid off and we have no personal debts. The real estate business has a mortgage on one of the properties.

We currently have the cash in a money market account that we could use to pay off the mortgage. We have kept that cash in the money market because the interest rate is higher than what we are paying on the mortgage and in case another cash rental opportunity presents itself.

Now I’m considering paying off the mortgage and then canceling our life insurance as we would be debt free personally and in our businesses and our child would currently inherent enough assets to be covered until an adult. Their 529 is also already funded to cover a four year in-state tuition school.

What would you do? What else should I consider?

[Jule]

In the grand scheme, it’s such a small amount that I’d keep it.

Also you are counting on assets that you are relying on income. I’d feel more comfortable with at least the same amount in investments, outside of the real estate and businesses where you are drawing an income from.

[Brian]

Ever hear of “tripping over a dollar to pick up a penny?”

Once again, you have provided some information but hardly enough to provide a real solution. The reality is, you are probably under insured.

If something happens to you or your husband, does your business still continue to operate like clockwork? Is it something you would want to sell? If so to whom?

Too many questions, and far too little answers…besides in this group, like in a DR group they would all tell you that you are fine to do whatever you want…which is true, but you have to live it.

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[John]

There is a lot of other information that would be helpful to make that decision, BUT it is a small amount you are paying so it doesn’t seem to be a big burden on finances.

The bigger item IMHO is do you have your estate plan in order, i.e. if you were both to pass away, who is taking care of your child, how and when will he/she get the assets, what happens to the businesses, etc.

That is where I would have questions and focus time on…

[Veronica]

As others have stated, I would keep it.

Leaving a business behind does not ensure your children Will know how to maintain it or keep it running, and managers can resign or something.

Besides, at your age is relatively easy to get life insurance but once You hit the 50-60-70 years, the premium increases a Lot. And Even some companies Will not insure You depending on health etc.

[Mel]

Keep it till your child is a full functioning adult. The extra money would allow the remaining spouse and child to not worry about liquidating assets or other money worries.

[Delton]

It’s good that you at least have term policies, but the issue with term is that it expires and then it’s difficult to get another one in retirement due to old age or bad health. I don’t believe in “self insuring”.

Early retirement is when you are MOST at risk of health issues like strokes, cancer, heart/liver diseases that can quickly drain your nest egg of retirement funds.

This is where having permanent life insurance with living benefits that pay out upon diagnosis would be extremely useful to have.

Also great for estate planning and quick transfer of wealth. And yes of course I sell insurance otherwise I wouldn’t have this knowledge.

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[Laura]

Seems a small price to pay for a few more years to make life as easy as possible for your family.

[Stephanie]

Keep it. God forbid something happens to both of you. Your child’s guardian will appreciate those funds that don’t have any strings attached.

[Cindy-Lou]

Does your insurance include living benefits? Would you foresee your child liquidating those assets to access that money?

I would keep it so that there is liquid cash for your child and those assets can be maintained for them into adulthood if possible.

That’s a relatively small cost for both of you to continue to maintain.

Financial and real estate or business decisions while under stress is never ideal.

I would keep it for a peace of mind cushion until you have more or equal set aside.

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[J.S]

Amazing! It sounds like you are self-insured! My question is what would you do with that extra money if you cancel?

Will it change things for you or would 1-1.5 million be a good return if something did happen. No not needed but you have already been investing in it for years.

[Jim]

Because you have a low-enough mortgage rate, I wouldn’t even pay off the mortgage before cancelling the insurance. (You say “We have kept that cash in the money market because the interest rate is higher than what we are paying on the mortgage and in case another cash rental opportunity presents itself.” which is smart. Keep the cash handy and just knowing that you *could* pay off the mortgage is good enough; it doesn’t have to actually *be* paid off.)

If you aren’t relying on the proceeds from the insurance to avoid having to have a financial or lifestyle hardship if one of you passes, then you’re at the point where you can consider yourself self-insured.

[Author]

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