You’re Self-insured

Dear Dave,
My husband and I are retired, we both receive nice pensions, and we owe $46,000 on our home. This is our only debt. I’m 65, he is 82, and we have more than $800,000 in variable annuities, along with substantial cash in savings. We also have $200,000 combined in life insurance coverage. If we cancel these two policies we can pay down an extra $10,000 a year on the house. Should we cancel the life insurance policies?
Anna

Dear Anna,
At 82 and 65, you probably won’t be able to get any more insurance at a decent price. If you get rid of it, you’re going to be without it. The good news is that you have enough money through your pensions, investments, and savings to be what is known as “self-insured.”
If I’m in your situation, I’d drop the life insurance policies and pay off the house as quickly as possible. Make sure you keep a good health insurance policy in place, because a hospital stay can eat your savings alive. I hope you have long-term care insurance, too.
Good question, Anna. You guys have done a great job with your money!
—Dave

How Late is Too Late?

Dear Dave,
How late is too late to get life insurance?
Anonymous

Dear Anonymous,
It’s pretty easy to get term life insurance – the only kind of life insurance I recommend – up until around age 70. Depending on your overall health situation, there are a few affordable policies available past that point. But once you get into your seventies and beyond it can be difficult to find reasonably priced coverage.
I recommend that most people have 10 to 12 times their annual income wrapped up in a good, level term life insurance policy. But honestly, you shouldn’t need life insurance at 70 or older. If you’ve been wise with your money, and saved and invested, you should be self-insured by that point. This means having plenty of cash in the bank to cover burial expenses and enough for a spouse to live on after you’re gone.
—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.