Dave Ramsey says: When is enough, you know, enough?

Dear Dave,

I’m 65 years old, and I work part time. My wife is 59, and she works full time earning about $160,000 a year. We’re both self-employed, so at what point do we stop buying term life insurance? I have a $500,000 policy, and we have $500,000 in savings. We’re debt-free, except for two car loans that total $25,000.

Franklin

Dear Franklin,

Okay, first let’s clean up those car loans. With your combined incomes, plus the money you two have in savings, there’s no reason to have car payments hanging around your necks. Aside from that, you’re in pretty good shape.

When it comes to life insurance, you should ask yourself some questions: Why am I buying this? Who am I trying to help with it? How much will they need? Life insurance is all about taking good care of the folks you leave behind.

It sounds to me like you’ve done a good job of looking out for your wife. If you passed away anytime soon, God forbid, she’d have a half-million in insurance money, plus an income of $160,000 a year. On top of all that, there’s another $500,000 already in the bank, plus a paid for home. She wouldn’t exactly have to struggle financially, would she? Now, if she passed away first (again, God forbid) you’d still have half a million in savings, plus a house that’s paid for. And don’t forget your part-time income.

Guess what, Franklin? At this point, you two are very close to being self-insured. On the other hand, if you want to spend a little money on a term policy for your wife over the next few years — and you can do so and still continue to build your nest egg — that’s okay, too.

— Dave