Dear Dave,

I’m 63-years old, and work part-time. My wife, at 59, works full-time, and earns $140,000 a year. We’re both self-employed. At what point do we stop buying term life insurance? I have a $250,000 policy, and we have $500,000 in savings. We’re completely out of debt, except for a couple of car loans that total $30,000.

- Herschel

Dear Herschel,

First, let’s clean up those car loans. With your income, and the money you guys have in savings, there absolutely no reason to have car payments hanging around your necks. Otherwise, you’re in great shape!

When it comes to life insurance, ask yourself why you’re buying it. Who are you trying to help, and how much will they need? It’s really about taking care of the people you leave behind.

From where I’m sitting, you’ve already done a great job of taking care of your wife. If you passed away she’d have the insurance money plus an income of $140,000 a year, a half-million already in the bank, and a paid-for house. She wouldn’t exactly have to struggle. If she passed away first, you’d still have $500,000 in savings, plus a house that’s paid for, and your part-time income. Way to go! You two have done a good job. At this point you’re very close to being self-insured!

On the other hand, if you want spend a little money on a term policy for her over the next few years, and you can do so and still continue to build your nest egg, that’s okay. The savings you guys have accumulated would allow you to live on about $40,000 a year. The proceeds from a term policy could supplement that, assuming you can easily afford it.

- Dave Continued...