Life Insurance threshold

Scanner · #1 (**permalink**) 02-11-2008, 01:01 PM

I bought a 15 year level term policy (or maybe it was 20 year - I'll have to check) when I was 28 so it will expire in my 40's. (I am 39). It was for 400K. I am thinking of buying another policy for 10-15 years but it probably wouldn't be as much since our wealth should be accumulating. Maybe like 200K. . .so there would be some overlap in years where the payouts would be 600K but then it would drop to 200K.

My question is, should I do this before I turn 40?

After I turn 40 is the Angel of Death knocking on my door in the form of an actuarial table?

That is, should I lock in a rate at 39 vs. 40? Or isn't there that much difference?

disneysteve · #2 (**permalink**) 02-11-2008, 01:24 PM

I don't believe there is anything special about 40. I think the insurance companies adjust year by year so 40 might be a bit more than 39 but there won't be a big jump. Term rates have steadily fallen so you'll probably be pleasantly surprised.

Do you think you are adequately insured? 400K sounds low. 200K even lower. I know you've got another kid on the way.

sweeps · #3 (**permalink**) 02-11-2008, 01:59 PM

Quote:

Originally Posted by disneysteve

Term rates have steadily fallen so you'll probably be pleasantly surprised.

And this is why.

Scanner · #4 (**permalink**) 02-11-2008, 03:34 PM

Yeah, I don't know. . .I'll have to think about it. My cholesterol runs high, so I don't get any discount there, pretty much a standard rate (I am a non-smoker), no preferred rate.

I thought about doing an additional 400K with a de-escalating benefit as 20 years progress so by year 19, my beneficiaries would only get $10,000 or something.

It would save on premium and I'd immediately have it up to 800Kish til age 43 or 48.

We have $123,000 in mortage debt and a $7800 business loan so DW woiuld get that difference after retiring those liabilities. She certainly wouldn't be able to retire but I think college and her house would be covered, plus a little to spare.

scfr · #5 (**permalink**) 02-11-2008, 06:01 PM

Wayne Farlow, a CFP who blogs here on SA under the name Finabguide's, has a Life Insurance Estimator that seems pretty thorough.

Life Insurance Estimator

maat55 · #6 (**permalink**) 02-11-2008, 08:17 PM

8 to 10 times your anual wage during child years then you can drop off later as your assets build and your children leave. Depending on your assets, another 20 after your other expires may be in order due to young children. I have another 14 years on mine and my children are gone. I only insure for 300k and 100k on my wife at 44.00 a month. I'm 45

FrugalFish · #7 (**permalink**) 02-12-2008, 07:05 AM

You can shop around online and see what various rates are running for you now, just look for one that doesn't require personal info for a quote. It will also allow you to plug in age 39 or 40 to see what rate differences are. I think eterm allows you to do this.

We just redid our life insurance about a year ago and I'd offer up the advice to start earlier than you think you should. They'll call you within 20 minutes to get the ball rolling, but it might take a couple months beyond that to get things in order, especially if they want to requisition your health records because of your cholesterol. It took much longer this time around waiting for underwriting, than it did 10 years ago.

disneysteve · #8 (**permalink**) 02-12-2008, 07:44 AM

Quote:

Originally Posted by Scanner

My question is, should I do this before I turn 40?

Another thing to keep in mind, not that you can do anything about it, is that sometimes they base your "insurance age" differently than your actual age. So if you turn 40 in 8 weeks and apply today, they may base your rates on age 40 instead of 39. As I said, though, I really don't think the 1 year makes much difference.

Like2Plan · #9 (**permalink**) 02-12-2008, 08:18 AM

Quote:

Originally Posted by disneysteve

Another thing to keep in mind, not that you can do anything about it, is that sometimes they base your "insurance age" differently than your actual age. So if you turn 40 in 8 weeks and apply today, they may base your rates on age 40 instead of 39. As I said, though, I really don't think the 1 year makes much difference.

On the other hand, some companies go the other way as an incentive for you to purchase rather than put it off. One of the companies from which I received a quote said they would give me the rates for the lower age 'til the end of my birthday month. (I ended up putting it off, anyway.

)