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10 years in

December 13th, 2019 at 08:19 pm

So 10 years ago DH and I bought our first life insurance when we had our first child. I bought a 25 year term for both of us. $500k for me and $2m for DH. Our premiums? $243/year for $500k for me. I was 30 and DH was 32. His was $1098/year. After 10 years of payments I have paid $2430 and $10,980 for peace of mind. It sort of bites to think I have spent that much but what if something happened? Or worse? What if something happens in the next 15 years?

As it stands I don't have more on myself but I have another super cheap $2m on DH through work. It's so cheap that we buy it. Might as well. Extra insurance. I have a large mortgage now and I still am not working full time.

But seeing these numbers makes me wonder if I should consider cancelling it? For sure I'll be happy when it's done. It sort of coincides with my DK2 finishing theoretically college if she finishes in 4 years. We'll be retiring so it should be great timing. But at that time we'll have paid around $25k for DH and $5k for me.

Should we cancel it?

5 Responses to “10 years in”

  1. Lots of Ideas Says:

    I would not cancel this insurance unless you have enough money in investments to pay off your mortgage, pay for college, and fund retirement.

    Insurance is something we hope to never collect!

    You are buying peace of mind.

  2. creditcardfree Says:

    I probably would keep it, but once your children are out of college and it lapses I'd probably let it go.

  3. Dido Says:

    Agree with the above. Insurance is NOT an investment; it is "worst case" money. If one of you died and there was no insurance, would the survivor be able to pay off the mortgage, the children's college, and save enough for retirement? It's really "sleep at night" money. Don't think of the total spent over 10 years--think that you've spent $3 a day to be able to get through if the worst happened. When the kids are out of school and the mortgage balance is lower and the policy premiums rise because your level premium term expires, the answer will be different.

  4. disneysteve Says:

    I replied to your forum post but you've given a lot more detail here.

    The sunk cost is irrelevant. Insurance is something we all pay for and hope to never use. That's the whole point. It doesn't matter what you're spending over the term period.

    If you have a large mortgage and a child who still has college ahead and you can't afford to fund all of that from your own income, then you need to insure his life.

    Ignore the cost of the policy. Think about how you would manage financially if he died tomorrow. Could you maintain your current lifestyle, pay the mortgage, put your kid through college, and retire comfortably? It sounds like the answer is no, so keep that insurance until the answer to all of those questions becomes no.

  5. rob62521 Says:

    When I was born, my mom took out a whole life insurance policy on me for $1000. It was around $16 a year and finally at 50, I cashed it in. Yeah. they made money off of me, but for many years, that was some security in case something happened to me, there would be at least a bit to help with funeral expenses. I write then because you are paying for peace of mind. Yes, it costs money, but so does going into debt if something bad happens. Unless you have the money to cover stuff if something happens, then I would recommend you keep the insurance until you do have investments or money saved. As many have said, it is something you buy, hoping you'll never need.

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