Do we need more term insurance with kids in college?


Q. My husband and I are both 50 years old and we both work. We have two children who will be entering university in the next few years. We each have $ 100,000 of life insurance from our jobs, and we both have $ 500,000 term insurance that will expire in four years, basically while the kids are still in school. To maintain policies longer, we know it costs a lot. What options do we have and do we really still need the term politics?

– Parent

A. We will assume that you originally purchased the life insurance policies to ensure that the surviving spouse and your children would be financially supported in the event of premature death.

At that point, you calculated that a death benefit of $ 500,000 would be sufficient to ensure that the surviving spouse and / or children, in combination with your other assets, would have sufficient funds to cover their needs.

In order to decide how best to proceed, you’ll need to redo a similar calculation, said Marnie Hards, certified financial planner at Aznar Financial Advisors at Morris Plains.

“For example, if you have enough funds to cover the rest of your children’s education costs and you don’t feel like you need to provide them with financial support beyond that amount just in case something goes wrong. something would happen to one or both. you, you might decide that letting life insurance expire is a reasonable decision, ”she said.

If, on the other hand, your children find themselves without funds to cover their remaining education costs or if a spouse finds themselves in a situation where they are not able to continue living the lifestyle that they are. regulars, it may make sense to get new term insurance policies to make sure you protect your loved ones, Hards said.

You are correct that it would be very expensive to continue paying the cost of a term life insurance policy after the term expires, she said. For that reason, it would make sense to consider purchasing one or more new policies, assuming you both can qualify, she said.

“If you decide you want coverage longer than the next four years, I wouldn’t suggest waiting for those policies to expire,” she said. “If you are both healthy and able to get a low rate on a new policy, I suggest applying as soon as possible. “

Hards said you could purchase a new policy to supplement your existing coverage for the next four years or completely replace your current coverage, but you shouldn’t surrender any policy until your new policies are fully in place.

“Keep in mind that it might be a good idea to go for a shorter term policy right now if you just want to be sure your kids’ college expenses are covered in case something happens to you,” he said. she declared. “The cost of a 10-year term policy will be a little less than the cost of a 20-year term policy with the same death benefit.”

Another option is to check the rates on your group life insurance policies through your employers, she said.

“It may be less expensive to get additional coverage from your employer, if available, than to purchase a new term policy,” she said. “If this is the route you choose, you need to make sure the policy is transferable if you leave your employer.”

Email your questions to [email protected].

Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for‘s weekly electronic newsletter.

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