Is It Advisable To Cancel My Life Insurance?
Life insurance is an essential tool to protect your family from financial difficulties in your absence. However, if you’re considering canceling your policy, you need to evaluate your family’s financial obligations to ensure they have enough support in your absence.
Factors to Consider Before Canceling Your Life Insurance Policy
Before canceling your life insurance policy, you should review the following financial obligations:
|Outstanding debts like mortgages and credit cards||Think of major property that could be repossessed by your lenders if the outstanding loans aren’t paid off, and evaluate your family’s ability to pay them off in your absence.|
|Future financial obligations like college tuition and weddings||If you’re planning to pay for your child’s college tuition or a wedding, you may want to consider holding onto your insurance policy.|
|Everyday living expenses||If your family can afford daily expenses, pay their bills, and retire in comfort without the use of life insurance funds, you may want to consider canceling your policy.|
|Burial expenses||If your family can afford these expenses without taking on new debt, you may not need your insurance; otherwise, a generous death benefit could cover these costs.|
While “life insurance for your whole life” may sound appealing, keep in mind that whole life insurance is much more expensive than term life. Average policyholders would do better to maintain their current policies to the end of their terms and then invest the difference in premiums themselves.
However, if you believe your heirs will be hit with a hefty estate tax bill, or if you have a pre-existing medical condition, you might want to consider purchasing whole life insurance.
Before canceling your life insurance policy, it’s essential to review your family’s financial obligations and evaluate your options carefully.
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