I’m 51, married and pay $200 a month for a $1.5 million term life insurance policy. When should I cancel it?

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Your argumentation is fantabulous worth if you inactive person meaningful years remaining successful this guaranteed level-premium term.

For example, if you person 5 years near connected a 10- oregon 20-year level term, paying $200 a period for $1.5 cardinal successful sum is cost-effective extortion portion your spouse remains financially dependent. The bully news: Life security proceeds are mostly not considered taxable income for national income-tax purposes nether IRS rules (though the decease payment tin beryllium taxable to property taxation if your full property exceeds the national exemption). Exact rates alteration by health, location, and insurer, but radical policies similar yours often fastener successful little rates. If it’s shorter than 10 years, reassess sooner.

You’re fundamentally paying the outgo of a emblematic household inferior measure for a tax-free $1.5 cardinal decease benefit. That’s astir 0.16% of the sum magnitude annually — inexpensive for idiosyncratic successful their aboriginal 50s with meaningful fiscal obligations. Based connected those numbers, and assuming your premiums stay changeless for the remainder of the term, it makes consciousness to proceed the policy. For a 50-year-old antheral successful bully health, a 20-year $1 cardinal word argumentation astir averages astatine $234 a month. On that basis, $1.5 cardinal of sum would beryllium astir $351 a period — meaning your $200 premium is much than 40% lower, apt owed to group-rate discounts. (A caveat: Premium averages evidently alteration by source.)

Term beingness policies typically tally betwixt 10 and 30 years and wage retired lone if you dice during that period. If you outlive the term, you whitethorn beryllium capable to widen coverage, but the premiums volition emergence sharply due to the fact that the argumentation converts to annually renewable rates. Whole life, successful contrast, carries fixed premiums and includes a cash-value component, truthful for that crushed it comes astatine a overmuch higher cost. Some policies let a “no-exam” renewal oregon conversion without wellness changes, but premiums inactive rise.