How to Tell When You Should Cancel Your Life Insurance

By Daniel Caughill | Valuepenguin

If you died next week, how would your family’s finances be affected? Do you have enough saved to fund their retirement? Would the house be repossessed? Read more to learn how to tell if you should keep or cancel your life insurance policy.

Some people view life insurance as an ongoing lottery. They’ve paid for the ticket, and they’re not giving it up until their number has been called. This tendency stems from a misunderstanding of the fundamental purpose of life insurance. Generally, you shouldn’t view insurance as an opportunity to make a profit (although some whole life insurance policies do include savings and investment elements); instead, you should view insurance as a tool for reducing risk, and you should reassess that risk regularly to see if it has changed.

Homeowners insurance alleviates the risk of financial ruin if your house were to burn down. Auto insurance indemnifies you for liability if you injure somebody else in a collision. Life insurance exists primarily to prevent your loved ones from struggling financially if you pass away before your family is in good financial standing.

You wouldn’t have a hard time canceling a home or auto insurance policy if you sell your house or car. Similarly, you shouldn’t hesitate to cancel a life insurance policy—or allow it to expire—if you’ve identified that you no longer need it. Here are four questions you should ask yourself to determine whether you still need a life insurance policy.

By Daniel Caughill | ValuePenguin | Published on May 14, 2018

NB: This article may have been edited and /or condensed. The information contained is as of date of publication, and may be subject to change. These articles are intended as general information only. A licensed advisor should be consulted regarding your specific situation.