Older couple looking out the window

At What Age Should You Stop Having Life Insurance?

Canceling a life insurance policy may seem counterintuitive. After all, you spent years paying into it, so why stop before getting a return on your investment? 

Chances are if you’re asking yourself “Should I cancel my life insurance?” then you’ve experienced a significant change in your life or financial situation. The truth is that canceling your life insurance policy can save you costly premiums, but you’ll also lose out on most of the money you’ve already invested in that policy. For qualifying policy holders, there’s a better way: selling your policy through a life settlement.

The advantage to selling your life insurance policy is that you can receive a cash payout that is four to seven times larger than if you were to cancel or surrender your policy. That’s an even bigger difference when you compare it to letting your policy lapse, which doesn’t offer a payout at all.

Here’s how to qualify for a life settlement:

  • Be 65 years of age or older
  • Have a life expectancy of 15 years or less
  • Have experienced a change in health since the policy was first issued
  • Have had your policy for at least 2 years
  • Have a policy with a death benefit payout of $100,000 or more 

To see if you qualify and to get an idea of how much your life insurance policy could be worth, use our life settlement qualification calculator.

That’s all a long way to say that if you’re 65 or older, it’s worth seriously considering your options. If you’re younger, it’s still a good idea to review your financial situation.  

At What Point Do You No Longer Need Life Insurance?

You no longer need life insurance when the costs required to keep it outweigh the assistance provided to your beneficiaries. When to stop your life insurance is a highly personal decision. Here are a few scenarios that could signal you no longer need your life insurance policy:

  • Your children have established careers and are financially independent.
  • You have medical expenses or other debts to pay down.
  • You would like to spend your golden years traveling.
  • Your expenses are too high for living on a fixed income.

Is It Worth Having Life Insurance After 65?

There isn’t any age cut-off that makes life insurance no longer worth it; it’s all about your personal situation. That being said, it is often worth having life insurance after 65 if you have dependents who rely on you financially. In this case, your life insurance policy can help provide:

  • Coverage for end-of-life expenses
  • Payment for existing debts
  • Inheritance for children or grandchildren

However, at this stage of life, your financial situation could be significantly different from when you first signed up for your life insurance policy. You may have paid off your mortgage or helped with your children’s student loans. Or, your children may be out of the house with families of their own.

If you’re older than 65, you can surrender your policy, let it lapse, or sell it through a life settlement (if you qualify). Here’s the difference between these methods:

  • Lapsing: You stop paying premiums without giving advance notice to your insurance provider. You forfeit future benefits and are not eligible for any amount of payout. This method is typically not recommended because you lose the most of your investment. 
  • Surrendering/Canceling: You contact your insurance provider to cancel your policy and forfeit future benefits. You no longer need to pay premiums, and you may receive a lump sum payout to cover a portion of the premiums you already paid into the policy, depending upon what type of policy you have.
  • Selling through a Life Settlement: You work with a life settlement company (like Life Settlement Advisors) to sell your entire policy, or just a portion of it, to an investor. If you sell your entire policy, you will receive a significant cash payout; you will no longer have to pay premiums; and the investor will receive the entire policy benefit. If you sell a portion of your policy, you will receive a smaller cash payout; you will no longer have to pay premiums; and your beneficiaries will still receive a partial payout from your policy. 

Typically, the benefits of getting rid of your life insurance policy kick in once you qualify for a life settlement. This happens when you’re at least 65 years old at the earliest.

Life Insurance FAQs

Navigating the ins-and-outs of your life insurance policy can get tricky, and it’s always best to contact your insurance provider and financial advisor for support. The following questions can also help you get started.

At What Age Does Term Life Insurance End?

Term life insurance ends at the end of the time period agreed upon at the start of the policy. Typically, term life insurance policies are in increments of 10, 20, or 30 years. 

Do You Get Your Money Back at the End of a Term Life Insurance Policy?

When a term life insurance policy expires, you do not receive a payout. Instead, you may be able to transition that policy into whole life coverage, which doesn’t expire. However, whole life policies are more expensive than term life insurance rates.

Does Whole Life Insurance Expire at a Certain Age?

Whole life insurance does not expire at a certain age. These policies end through cancelation, a lapse, a life settlement, or in a death benefit payout to beneficiaries.

What Happens To Life Insurance When You Retire?

You can keep employer-provided life insurance plans after you retire. However, because you are no longer on a group payment plan that’s connected to your employer, you may experience an increase in premiums. To avoid a sudden increase in costs, you can help plan for retirement by seeing what your insurance options are, whether that’s staying on your employer’s plan or switching to independent coverage.

Prepare for What’s Next with Life Settlement Advisors

If you qualify for a life settlement, this may be the right financial decision to make the most of your golden years. Whether you want to ease financial pressures or have new experiences, selling your life insurance policy reduces monthly payments while putting cash in your pocket. Interested in seeing if this is the right option for you? Give us a call today. 

Get in touch with Life Settlement Advisors today to take the first step toward converting your policy into cash.
Life Settlement Advisors
Leo LaGrotte
At Life Settlement Advisors, we strive to be a voice of confidence and assurance for our clients. Our goal is to educate you about the life settlement process so you can make an educated decision about whether it is right for you.