For retired couple, case for life insurance is hard to make

My husband and I are both retired, ages 63 and 66. I still do some consulting work as a CPA. We have an investment portfolio of $700,000. Our children are grown and not dependent on us for living expenses. I had always heard that, when no one is counting on you for income, there is no need for life insurance. We are still carrying life insurance and trying to decide whether we should drop it. Some of the literature from the insurance industry says you should keep it. Suze Orman says you should drop it.

We are conservative and not sure what to do. Could you provide some insight? We have long-term-care insurance and are both in good health, although we have some health conditions that are under control.

R.V.

You're right – most of us should "outgrow" our need for life insurance as we approach retirement. Research has shown that young couples are usually underinsured, while couples in their 50s and older are overinsured.

One of the better uses for a life insurance policy that is no longer needed as life insurance is as a substitute for long-term-care insurance – while the money is not available until the person needing long-term care dies, a life insurance death benefit can help replace assets lost while caring for the spouse in long-term care. It can also be used to replace some of an inheritance that has been lost to long-term-care expenses.

You have long-term-care insurance, so it's hard to make a case for retaining the life insurance policy. While the accumulated cash value in a policy may be earning an attractive rate, most of the earnings are likely to be absorbed by the ongoing cost of the life insurance. You're probably better off taking the cash value in the policy and investing it – or viewing it as a "life dividend" and doing something you enjoy.

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