AssetBuilder Inc. Registered Investment Advisor - Simple Investing. Smart Future.

I just finished reading "Spend 'Till The End" and have questions.

I bought Larry's software when it first came out.  E$Planner says neither my wife (62) or I (71) ought to have life insurance.  I retired recently, and my wife has a very part time job and does not make much money.  We both have term life insurance.  We both are cancer "survivors" or at least hope we are.  We have been very fortunate to have pension, 401K and IRA income to rely on that according to E$Planner should allow us to live comfortably for the remainder of our lives.  We are hesitant to cancel life insurance, as we are not yet beyond the time to be sure we are really survivors.  It is hard to get sound advice from people who are good salesmen!  Any help would be appreciated.   

The purpose of life insurance is to allow a loved one to maintain a given standard of living following the death of an income producer. 

If your wife died, would the loss of her pension, social security, and part time earnings have a significant impact on your life style?  Note:  Her IRA and 401k money remains intact for your use, unless she has willed them to somebody else.

Men tend to have greater retirement incomes than women, therefore there is a greater chance that her standard of living would go down if you die first.

You need to determine how much total income would go down if either of you die, and if there will be enough for the survivor to maintain a desired standard of living.  If income is inadequate after accounting for reduced expenses and possibly smaller living quarters, then this a gap that can be filled by life insurance.

Bryan 

 I would point out as a side note that 401k/IRA beneficiary designations usually trump what is in a will.  So check those plan documents!!

The real purpose of life insurance is to preserve the living standard of your loved ones in the absence of you and your earning power. ESPlanner calculates life insurance needs as a function of maintaining a standard of living for the survivor. Since there is no great need to replace anyone's earning power once they are retired, ESPlanner will generally recommend no life insurance.

One purpose your life insurance might still serve, however, is as a proxy for a long term care policy. Rather than buying a specific policy for long term care, having the life insurance can act as a resource restoration tool should one of you need long term care.

Suppose, for instance, that you needed long term care for about a year. That would be expensive and it would force you to draw down your retirement assets. Having the life insurance policy would be a way to restore some, or all, of your retirement assets upon your death.

Scott

 If you are interested in buying a life insurance policy you probably want to save as much money as you can. Many people think that there is no way to save with life insurance, when the fact of the matter is that nothing could be further from the truth. There are many things that you can do in order to keep your level of coverage high and your premium low. Of course you may not be able to take advantage of every option, but a few of them should work out for you.

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reetha