I Canceled My Life Insurance Policy. Here's Why

Not everyone needs life insurance at all points in their life.

A life insurance policy can give you peace of mind that the people who depend on your income (such as a spouse, children, or even a business partner) will not be left high and dry if you pass away and that income disappears. But what if you don't have anyone depending on your income? Do you still need a life insurance policy? Perhaps not.

A little background

I got my first life insurance policy in 2015, based on a discussion with the insurance agent who handled my auto insurance and renters insurance. I was in the process of combining policies with my partner at the time, who became my spouse later that year, and the insurance agent suggested adding a term life policy, noting that my future spouse depended on my income. Since I was fairly young and in good health, the policy's monthly cost wasn't a lot, and it seemed like a good move to get it.

Fast forward a few years

I ended up getting divorced in 2019, and honestly, the life insurance policy didn't really cross my mind at the time. Note: If you go through a major life change like a divorce, try not to forget about things like life insurance. You will want to review your coverage and change the beneficiary named in your policy, if it's your former spouse; some states have laws automatically revoking a former spouse's beneficiary status after a divorce, but not all.

In 2020, I was facing a possible salary cut at work (thanks, COVID-19), and was frantically reviewing all of my expenses in an attempt to make some cuts. One of the things that ended up on the chopping block was my life insurance policy.

Why cancel the life insurance?

I already lived paycheck to paycheck, and was carrying a fair amount of debt I was attempting (and sadly failing, at that time) to pay off. So there wasn't much to cut besides the odd streaming service and my life insurance policy. And as I noted above, I was divorced. I also live alone, I rent, and I don't have kids. So at that point, I didn't really need the coverage. However, that will likely change in the future.

I will most likely have life insurance again

I'm planning to buy a house in a few years, and when I do, I intend to purchase a life insurance policy with enough coverage to pay off my mortgage. I'll likely make the beneficiary my father. He lives in another state, and I know he doesn't want to outlive me, but if I go first, I want him to receive my house and not have to pay off the mortgage on it. He can sell it and keep the profit, or rent it out, or do anything else he wants with it (after all, I'll be gone). As I pay the mortgage down, I will need to review my coverage to ensure I have the right amount.

Life insurance isn't always a necessity, and there may be some points in your life where you don't need a policy at all. Just like with any financial product, it's a good idea to honestly consider your needs and responsibilities to make the right decision for you.