Life insurance

[FullAuto]

For the married people and/or people with kids...

Do you feel you have adequate life insurance? Do you have enough on you and your spouse to pay off all debt? Percentage you carry in term/UL/WL? Anyone care to list how much you have in terms of an income multiplier? Example: $50k/annual income & $500k insurance = 10x

I currently have a very small amount through work that wouldn't even pay off my house. I'm currently researching upgrading to ~30x income. I'd like 25% GUL in a 20 pay, 75% 30 year term but I don't think I can afford it. I'll probably end up with 10% GUL in a 20 pay, 90% 30 year term.

My wife has none. She doesn't want any. I don't know what I'm going to do about her.

I know age has quite a bit to do with needs. The older you and your kids are, the less your liabilities should be. I'm 33, my wife is 32 and our son is 4. Our total debt is less than 2x our gross income so we're not doing bad there though.

 

[dru]

Yes, I feel that my wife and I have enough. We have more than enough to pay off all current debt as well as expected future debt (student loans for example). All my life insurance is 100% term. She has maybe 5-10% that is whole life.

I look at life insurance as a means of protection only. This means that as I go through life and (presumably) accumulate assets and decrease debt or at least debt as a percentage of income or assets, my need for insurance decreases. As a result, I find myself having little need for whole life and instead focus on term (usually 20 year terms). Term is also much cheaper than whole life or universal life as I'm sure you know. When you think about it, whole life doesn't make a sense because you are giving your money to an insurance company, they invest it, earn a return, and keep it for themselves. Meanwhile the cash value on a whole life policy increases but is usually not inflation adjusted, meaning that policy, when you die in 50 years, will pay out money in today's dollars. when you look at the potential return in real dollars, return is usually what you could expect to get in an average bond fund....So save yourself the cash you would spend with whole, buy term, and invest the balance in a smart, well balanced long term investment strategy (in your case, heavy on equities)

Why do you want 30x your income? That seems like a very high amount of life insurance but YMMV. We have enough so that if I die, the house is paid for, all other debts are paid for, and she has a few hundred thousand left over to do one or more of the following things
A.) set aside to use as an asset pool for supplemental income
B.) set aside for college education fund for kid
C.) use to go back to school to increase her job skills to get a better job that pays the bills. (not that she's an idiot, its just that she's a kindergarten teacher at a Catholic school and I'm sure you know how well that pays, lol)

we do NOT have enough insurance to where she could just not work the rest of her life (not saying this is what your intent is, just explaining how we see it.)

Also I would STRONGLY recommend that you get a policy on her with yourself as beneficiary. If she dies, then the responsibility of providing and raising your son falls to you exclusively. As I am sure you have a job, some means of arranging either daycare or in-home care will be necessary and that will cost money. With that being said my wife's policies would pay enough for the house to be paid, her student loans paid off, and final expenses + enough for a good start on a college fund and some child care expenses.

Good job on keeping your total debt below 2X your gross income. Very prudent thing to do and will allow you to set aside more for yourselves later on instead of paying it all out in interest

 

[Zombie]

I have 4x my income on me and 2x my income on my wife

Fact is I am the one whose income we rely on we have truly no debt and primary concern would be paying rent and taking care of the kids.

 

[HMFIC]

Life insurance is a bet that you're going to die within the term.

With my typical luck, I'll lose that bet as soon as I pay the ante.

 

[inactive]

I have 6 times my income through the group plan offered by my employer (so effectively it's a 1 year term, since the rate varies every January 1st). But it's cheap since my employer pays part of the cost, so I go with it.

I have another 6 times on separate term policy.


The way I got to this amount is that it would clear all debts, which is only student loan and home. It would have enough to cover (estimated) college tuition and fees for my kids at a community college and state school. It would provide an living income [that is, equal to my take-home salary less current debt payments] for the next 20 years (roughly the time my kids would finish college and leave the wife's nest). In addition to that, my family would have my current savings and retirement income. Also, the kids I believe would get some joke of SSI (haha!).

It's rough math, but it's hard to get these kinds of things exact, as who knows what would happen in this scenario. Inflation? Wife remarries and see more income? One of my or her parents dies and grandparents see an inheritance to supplement future expenses? But at least it's something to keep them in a stable place.

 

[FullAuto]

I'm looking at 30x income because it seems to be the max most companies will allow on <40 year olds. At my age, the difference in 20x coverage to 30x coverage with the additional all in term is only about $15/month. I also don't make a bunch on money so 30x my income may only be 10x -15x other people here. I'm looking at UL instead of WL because I'm more concerned with death benefit over cash value and taking a loan out against it later. I'm also hoping I don't die during the term so I want to know there will be something available later. I'd like to just establish the rates now while I'm young. And if I set it up correctly, hopefully I won't have to pay on it after mid-50s.

 

[inactive]

Personally, I don't care for UL or WL. I did the math, and figured I was better buying the term, and putting the difference in premium into investment accounts with little to no fees (like IRAs offered through Vanguard or T.Rowe Price). YMMV. My wife's uncle invest heavily in WL as he's filthy stinking rich, and sees a tax advantage with that investment, but for most people it's very rare that the tax benefit outweighs the reduced ROI.

 

[denis22]

Considering inflation rates, most experts believe 10 to 15 times your annual income is a good way to come up with your ideal coverage. But there’s really no rule of thumb – it basically depends on how much you ideally need and how much you can afford. Aggregator websites that offer free life insurance quotes are very helpful – you can easily find out how a change in coverage may affect premium payments. They’ll help you get the maximum coverage for the least amount of premium payments.

Denise Mancini
Disclaimer: I work for AccuQuote and this is my personal opinion.

 

[Glocktogo]

5X annual gross income, plus a separate policy that pays off our mortgage.

 

[tntrex]

I told my wife I don't need any because she can do better than me easily anyways. lol