Term Life Insurance

**jIM_Ohio** · 06-02-2010, 07:32 AM

I think your amount is about right... covers all debts
if family is one income, you need to ask yourself a question- if the spouse which works is the one which dies, are there additional risks to insure?

For example stay at home mom- insure for all debt, and daycare costs (so 2 M looks right in this case)
working spouse- insure for all debt, plus additional money to replace lost income.

If both spouses work, and would continue to work if household was single parent, the risks aren't different to suggest different amounts.

IMO you want insurance for as long as you have the debt (420k mortgage). If mortgage will be paid off in 15 years, your risk picture changes then (you need less insurance) so either go with shorter term now, or lower the benefit once debt is paid off.

FYI for us, its the following:
500k each spouse
plus what work gives each of us (2X-4X salary)

Logic- 350k mortgage
car debt around 10-20k
no other debts
daycare cost is about $300/week= $15k per year

Because we only spend about 75% of what we take home, both of us know we can work and stay in same house if mortgage is paid off on one income. I have it a little easier because I make more money, but both of us agree we could live on our income alone.

If the incomes are lopsided, there is more risk to higher earner dieing, so I would insure that person for more money.

**jefffou** · 06-02-2010, 07:44 AM

I really like the idea of a 30-year term vs. a 20-year term for your age.

One, let's assume you do have your last child in about 6 years. This means that if you bought a 20-year term life policy today, your children would be about 14, 16, and 18 when your current policy would expire. This, in my opinion is the time when you really need it.

Also, a 30-year term life policy will take you and your husband into your early sixties. If you apply the sound personal financial wisdom of all the folks on this board, you may find that you have enough funds to do without life insurance for the remainder of your lives, at that point.

My $.02.

**tripods68** · 06-02-2010, 01:11 PM

I agree 30 year TERM is a better choice. I have it.

**maat55** · 06-02-2010, 01:55 PM

When your young, 20 and 30 year terms that are 8 to 10 times your income. Middle age, 10 to 20 year term 8 to 10 times your income. Later years when kids are gone, 10 years 5 to 8 times your income provided you have saved well.

**MonkeyMama** · 06-02-2010, 02:33 PM

Agreed with 30 year term.

Why are you getting insurance? Because of your children? It's the only reason we have life insurance. If you are just starting having kids, and want them to have financial support until they are 18 (or until they graduate college, etc.), then, you would need a longer term.

In addition, I think it's cheaper to insure more while young, and cancel it prematurely, if you decide you don't need it later. Kind of my thinking on the 30 year policy. (Though main factor was we bought it very young - when our first was born in our mid 20s). Rates have been historically low - why this makes sense now. With age and medical issues, lord knows we'd pay a lot more for the same coverage today.

My personal experience getting insurance young was being idealistic, and not necessarily factoring inflation very well. The younger you are, the higher you may want to aim (10 times income means little when you are at the beginning of your career).

Anyway, I just think it's important to think through why you need insurance. How your spouse would use it, or your kids. Would your families' needs be met? etc., etc. I didn't find the "10 times income rule" or "the first thing you'd do is pay off your house," (pffft) advice to be particularly helpful when we shopped life insurance. What we thought about was how we could retire much younger with both our incomes, and what a huge cost it would be for our appointed guardian to take on care of both of our children (in their high cost region), if something happened to the both of us. (Overall, my spouse and I don't rely on each other financially - we have a modest mortgage towards that end).

I didn't really think my spouse would leave the workforce for an entire decade. We've since got supplmental/temporary insurance to cover that.

**jIM_Ohio** · 06-02-2010, 05:11 PM

maat55 When your young, 20 and 30 year terms that are 8 to 10 times your income. Middle age, 10 to 20 year term 8 to 10 times your income. Later years when kids are gone, 10 years 5 to 8 times your income provided you have saved well.

Originally posted by MonkeyMama View Post

Agreed with 30 year term.

Why are you getting insurance? Because of your children? It's the only reason we have life insurance. If you are just starting having kids, and want them to have financial support until they are 18 (or until they graduate college, etc.), then, you would need a longer term.

In addition, I think it's cheaper to insure more while young, and cancel it prematurely, if you decide you don't need it later. Kind of my thinking on the 30 year policy. (Though main factor was we bought it very young - when our first was born in our mid 20s). Rates have been historically low - why this makes sense now. With age and medical issues, lord knows we'd pay a lot more for the same coverage today.

My personal experience getting insurance young was being idealistic, and not necessarily factoring inflation very well. The younger you are, the higher you may want to aim (10 times income means little when you are at the beginning of your career).

Anyway, I just think it's important to think through why you need insurance. How your spouse would use it, or your kids. Would your families' needs be met? etc., etc. I didn't find the "10 times income rule" or "the first thing you'd do is pay off your house," (pffft) advice to be particularly helpful when we shopped life insurance. What we thought about was how we could retire much younger with both our incomes, and what a huge cost it would be for our appointed guardian to take on care of both of our children (in their high cost region), if something happened to the both of us. (Overall, my spouse and I don't rely on each other financially - we have a modest mortgage towards that end).

I didn't really think my spouse would leave the workforce for an entire decade. We've since got supplmental/temporary insurance to cover that.

I am not sure where maat got his ratios to income from...

I tend to agree with Monkey mama more, in that you should focus on your debts, expenses, and why you need the insurance to determine amounts. What I needed at age 25 before kids (200k) and what I needed once kids came at age 35 (500k) was much different for many reasons. There was a house upgrade, kids, new expenses... plan as best you can, but life does change.

Term Life Insurance