You should stop paying for life insurance when you have eliminated all your financial liabilities and future obligations, including charitable intent. You could also stop paying for life insurance if you have no beneficiaries, business partners or charities. You could stop paying for your cash value life insurance if the performance of the policy results in the policy sustaining itself to maturity. To be sure of the performance, or lack thereof, you need to order an in force ledger from the life insurance company.
If you have a Term policy that has entered the annually renewable period, you will probably want to stop paying on that policy and purchase a new one at a more reasonable price. If you can convert the policy before it enters the annually renewable period, that is all the better.
If you have a Universal Life policy that is losing cash value each month, you also may want to look at getting a new policy. It depends, as it may be fine the way it is. But if it looks like it will end before you want it to, and if you can get a new policy at a reasonable cost, you may want to stop paying on that policy and get a new one.
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
How about today?
There are many creative ways to fund your life insurance policy.
Let’s suppose you have term insurance with 10 years left on the premium guarantee. You could, of course, just keep paying the premium for those 10 years.
If the carrier doesn’t get those 10 years of premium payments, you will lose the coverage.
Is there any way you could stop paying but still retain the guarantee? Yes, there is.
You might be able to use a single premium immediate annuity to fund the policy. Make one payment into the annuity, and the annuity will, in turn, pay your insurance premium for you. Depending on your age and other factors, the amount of money you put into that annuity could very well be substantially less than the total premium you would end up paying for the next 10 years.
This way you could stop making premium payments after that one annuity contribution, but still retain your guaranteed coverage.
Now let’s suppose you have a universal life policy.
I am sure you know that this is a flexible premium product. You could overpay, underpay, and even stop paying. Of course, you need to know what you are doing here to make sure you will have the coverage you need for as long as you need it.
Given that, you might be able to plop one lump sum into that policy now and never have to make another payment – and still get the guarantees you want. All you need is for the carrier to do a simple calculation and illustration for you.
Here again, you could stop making payments but still retain the coverage.
There are many ways to skin a cat, as they say. Not that I think cats should be skinned at all - but you know what I mean :)
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If you have a Universal Life policy that is losing cash value each month, you also may want to look at getting a new policy. It depends, as it may be fine the way it is. But if it looks like it will end before you want it to, and if you can get a new policy at a reasonable cost, you may want to stop paying on that policy and get a new one.
There are many creative ways to fund your life insurance policy.
Let’s suppose you have term insurance with 10 years left on the premium guarantee. You could, of course, just keep paying the premium for those 10 years.
If the carrier doesn’t get those 10 years of premium payments, you will lose the coverage.
Is there any way you could stop paying but still retain the guarantee? Yes, there is.
You might be able to use a single premium immediate annuity to fund the policy. Make one payment into the annuity, and the annuity will, in turn, pay your insurance premium for you. Depending on your age and other factors, the amount of money you put into that annuity could very well be substantially less than the total premium you would end up paying for the next 10 years.
This way you could stop making premium payments after that one annuity contribution, but still retain your guaranteed coverage.
Now let’s suppose you have a universal life policy.
I am sure you know that this is a flexible premium product. You could overpay, underpay, and even stop paying. Of course, you need to know what you are doing here to make sure you will have the coverage you need for as long as you need it.
Given that, you might be able to plop one lump sum into that policy now and never have to make another payment – and still get the guarantees you want. All you need is for the carrier to do a simple calculation and illustration for you.
Here again, you could stop making payments but still retain the coverage.
There are many ways to skin a cat, as they say. Not that I think cats should be skinned at all - but you know what I mean :)