Most of the articles on this website about term life insurance and disability insurance deal with the front end: how to buy it, what kind of policy to buy, how much to pay for it etc. There are very few posts (this one and this one) about the back end – when and how to get rid of it. This post is going to be a little bit more personal. We’re going to talk about our family and our policies and what we’ve done with our policies throughout my career and what we’re doing with them right now.
The whole point of term life insurance and disability insurance is to cancel it when it is no longer needed and save those premiums. Insure well against financial catastrophe while you have a need, then get rid of it once the need is gone since insurance by definition always costs more than it is worth on average. A typical physician is going to have a 5 figure monthly benefit from disability insurance and a 7 figure benefit from term life insurance. With the disability insurance, the goal is to have a benefit large enough that, after-tax, you can both maintain your standard of living AND still save for retirement (because disability insurance generally stops paying at age 65-67.) That usually means a benefit of $10-20,000 per month. With term life insurance, many high-income professionals want their family’s financial life to be exactly the same with or without them. So they buy enough that when combined with their nest