Should I continue to pay my term life insurance premium?

Question

I am a 51 year old female. My policy date of issue was 6/16/96. Years payable: 15. Benefits: $250,000. Annual premium (billed quarterly at $80.16) is $302.50. I have already prearranged my cremation worldwide through Neptune Society. I have twins in their first year of college.

Answer 1

If I understand this correctly, what you are really asking is, "Do I want to continue this coverage in force by continuing to pay premium?" because the rest of your statement indicates why you may have taken this policy out in the first place.

So, this becomes a financial planning question, if I'm correct.

It looks like you have taken care of what might be called "burial expenses". Good for you.

Your twins just started college, so you probably want them to get something to finish college should you die in the next four years (college typically takes 5 years these days, not 4).

Those are the only stated concerns that you have. If they are truly the only ones, you have coverage with the level premium left for about four 1/2 more years, or until 6/16/2011.

This appears to be a level-premium 15-year term contract. All insurance policies have a "death benefit" which is the "face amount". Two options:

1) Keep the policy in full force. Pay each premium on time. Do not let the policy lapse for non- or late-payment. At the final anniversary date in 2011, stop making premium payments (your new premium will be huge compared to your current premium - that's what level-premium term plans usually do) and allow the policy to lapse.

2) Reduce the face amount of the policy and get a correspondingly lower premium now. Most companies (not all) will do this for you. Just call policy owner services and ask for the form to do so. Most companies will not let you reduce the death benefit below a certain amount, typically $100,000. Given your twins situation, I wouldn't lower the premium below $150,000.

3) You probably have a "conversion" privelege on this policy that allows you to convert all or part of the coverage to a permanent plan of insurance without the need to medically qualify. The cost-per-thousand on a permanent plan of insurance at your age is quite high and it doesn't sound like you would be interested in that policy feature, if available. But, it's something you should know about before you make a final decision. A customer service rep at the home office of the insurance company can explain this to you.

I strongly recommend that you not drop the policy at this time. Your twins would greatly benefit from being able to pay off any debt or unpaid hospital/medical bills that might have not been covered by your health plan and whatever is left over could be applied to their education and general upkeep until they become fully independent.

An insurance policy is a unique financial instrument in that it turns a promise into cash within a very short time after an event that usually requires liquid cash for any number of important reasons. And, that cash is usually not income taxable.

$302.50 per year is not a lot of money to be putting out for that kind of benefit for your survivors should you die prematurely.

Answer 2

Request new quotes to see if premiums can be lowered. The insurance would be available for your twins while the still are being supported by you.

Answer 3

twins in first yr? you die , who pays their college costs? you have a spouse who needs the money? you have a charity you want to fund? you want to leave some money to kids?
you got early termination fees?
i'd say keep it, it is cheap. suggest you visit daveramsey.com to learn some other ideas on term life. wish my T.L. was that cheap.
course my littlest will be 18 when i get to 70.
go with knowledge.

Answer 4

Yes.

Answer 5

Oh my god, lucky you. You are getting it really cheap! I want to get it too.