At what point is life insurance not worth it?
Asked by: Margaretta Becker II | Last update: October 27, 2025Score: 4.2/5 (19 votes)
At what point should you stop buying life insurance?
The traditional answer to this question is once your dependents no longer rely on it, that is, when your other assets could support them should you pass away. However, from a behavioral standpoint, I find it difficult to let go of my term life policy, even though my family would probably be fine without it.
At what age does life insurance not make sense?
If retirement savings, investments and Social Security are enough to provide for final expenses and your survivors who still rely on your income—you may not need life insurance in your 60s. In some situations, however, having life insurance after 60 makes sense.
Why would you not need life insurance?
As mentioned above, the cash value within a life insurance policy generally grows income tax free and capital gains tax free. You may not need life insurance if you pay little or no income tax or capital gains tax on investments, or have losses that will be applied against income or gains for the foreseeable future.
What is the downside of life insurance?
Cons of life insurance
One disadvantage of life insurance is that the older you are, the more you'll pay for a policy. This is because you're more likely to pass away during the policy period than a younger policyholder and will, in turn, cost the life insurance company more money.
Martin Lewis' Guide to Life Insurance - Different Types | This Morning
Who should not get life insurance?
Not everyone needs life insurance. People who've accumulated enough wealth to cover their final expenses and who don't have dependents can usually forgo paying for life insurance.
What does Suze Orman think about life insurance?
In her opinion, she feels you would be better off investing the money you save by buying cheaper term life, than by investing in life insurance. Even if you don't invest the entire difference, her claim is that you are would do better to spend it elsewhere to avoid what she sees as the high fees of whole life.
What does Dave Ramsey recommend for life insurance?
Core Ramsey Teaching: You only need life insurance while you have people depending on your income. Buy a 10–20-year term policy worth 10–12 times your annual income. Since life insurance is only for the short-term, you should only buy term life insurance. (Hence the name.)
What happens if someone dies without life insurance?
Loved ones might have to take out a loan or arrange a payment plan with the funeral home, or even launch a crowdfunding campaign. If no one steps forward to pay, it's possible the coroner's office will bury or cremate you without a family service.
Why is life insurance not a good investment?
The cash value is slow to grow
Eventually, a higher percentage of your premium will go toward your cash value. But this takes a while, so it can take 10 to 15 years (or even longer) for you to build up enough cash value to borrow against.
When should you take out life insurance?
While you should think about life insurance when you become an adult, it's particularly important as soon as you have children, or have a partner or family members who rely on your income. No matter what your age, our guide helps you choose the right life insurance policy.
Should a 70 year old have life insurance?
Life insurance can be a useful financial tool for seniors over 70 to provide loved ones with a payout in the event of their passing. Many policy types are available, including some with no medical exam, and maintaining a healthy lifestyle can help seniors qualify for lower premiums.
At what age does insurance start going down?
Experienced drivers are less likely to have accident claims, which means they cost less to insure. At Progressive, the average premium per driver tends to decrease significantly from 19-34 and then stabilize or decrease slightly from 34-75. At age 75, the average premium begins trending upward.
Do I get my money back if I outlive my life insurance?
Do you get your money back at the end of a term life insurance policy? You can't get your premium dollars back from a standard term life insurance policy once it expires. However, if you buy a return of premium (ROP) rider, then you could get some or all of your premium back if you outlive your policy.
What age should you stop paying for life insurance?
Many people in their 60s and 70s may no longer need life insurance. They may have already paid off the house, stopped working, sent the kids off to care for themselves or accumulated enough assets to offset the need for life insurance. But sometimes buying or maintaining a life insurance policy over age 60 makes sense.
How much does it cost to convert term to whole life?
There is usually no direct cost to convert term life insurance to a permanent policy. However, premium payments will likely be higher. Consider a lower coverage amount on the new policy if you're interested in keeping premium amounts lower.
Is it irresponsible to not have life insurance?
While not mandatory, life insurance is important if others depend on your income or if you have financial obligations like a mortgage or debts. It helps provide financial security for your loved ones, covering expenses and helping ensure their future stability in your absence.
Who pays for cremation if there is no money?
Medicaid and state assistance programs
California offers several state-specific programs to assist with funeral and cremation expenses for low-income individuals. Medi-Cal, California's Medicaid program, may provide assistance in certain situations.
When someone dies what happens to their life insurance?
Life insurance proceeds usually bypass the estate and go directly to named beneficiaries, but if there are no beneficiaries, the proceeds may become part of the estate assets.
What is Suze Orman say about life insurance?
There are plenty of savings plans other than an insurance policy that are a far smarter move. With that in mind, in my opinion, the only type of life insurance that makes sense is term, which is good for a specific period of time.
Is term or whole life better?
It depends on your needs and wants. If you only need life insurance for a relatively short period of time (such as while you have minor children to raise), term life may be better because the premiums are more affordable. If you need permanent coverage that lasts your entire life, whole life is likely preferred.
What is a reasonable amount of life insurance?
Here are some general guidelines on how much term life insurance is enough: A general rule of thumb is to buy a policy worth 8 to 10 times an individual's annual income. For example, if your annual salary is $100,000, it makes sense to consider a policy with a $1 million death benefit.
What does Warren Buffett think of life insurance?
Warren Buffett described the insurance business as particularly enticing. “It's so much fun because you get the money at the start, you know, and then you find out whether you've done something stupid later on,” he quipped.
Should seniors keep life insurance?
The bottom line. Life insurance is a smart idea for most seniors. That's especially the case if you have a spouse, lack plans to cover end-of-life costs or don't have a long-term care insurance policy.
Why do financial advisors push life insurance?
Many financial advisors view life insurance as an important part of the financial planning and wealth protection services they offer their clients. Life insurance offers financial protection to surviving beneficiaries in the event the insured policyholder dies.