Term Life Insurance - How much?

[red92s]

My wife and I are interested in purchasing term life insurance for each of us. The only people I've had tell me good things about whole life policies, were the people trying to sell one to me, so I'm pretty leery of them.

We are struggling a bit with how much coverage we should be purchasing at this life stage. No kids currently, but that event horizon is rapidly approaching. Any guidance on how to best select values and terms that don't leave us "overinsured" right now or "underinsured" 10 years from now?

Vital Stats
- 28/31 years old, both in good health and non-smokers
- Gross pay $175,000 (combined, essentially equally split)
- Only debt is the mortgage (~$270k @ 3.375%)
- Combined retirement assets of ~$100k
- long-term Savings/investments of ~$30k

[bigdaddybus]

Life insurance needs change. I would say the current need for you and your spouse would about $325-350K each. Thats enough if one of you passed away the other could pay off the mortgage, take a leave of absence from work, and have extra money as a cushion.

Now kids change all that. Say you have twin newborns right now. From daycare thru college there are tremendous expenses. Do you and your spouse agree that the life insurance you purchase should allow the survivor to maintain your current lifestyle? Is 75% of your current lifestyle ok? Those are things you and your spouse need to decide.

I can tell you that I am 40, make $100K a yr and have 800K in term life insurance that expires when I am 53 and my kids are grown and out of the house. I bought it when I was 33, and was making around 65K a yr.
When I bought the policy it felt like a bit more than we needed, right now it feels about right, and I'm sure as I get older it may feel a bit small (like 10 yrs from now if I am making $150K) but....our non retirement investments are doing well and that helps suppliment any future life insurance needs.

I would add 30% to my initial suggestion of $325-350K. And 200K per child and I would think that would be close to your life insurance need. ex. $455K+200K=655K for 20yr term with 1 child.

hope that helps

[sblatner]

We have three policies that are staggered. We started with $500k via two different policies and then just added another $500k while the kids are in college. Probably didn't have enough earlier but we do now. We like that when one policy expires, we still have ones in place.

I think we pay more because I remember our agent telling us there are fees associated with each policy that are duplicated. We decided we are okay with that.

So, we have $1M each while the kids are in school which will reduce to $500k and then nothing by the time we retire.

[humandraydel]

I would say the bare minimum is $500k each but term life insurance is pretty cheap so even $1m would not be too much. Do you have any life insurance through work? Sometimes companies pay for 2-3x salary. Also, Social Security survivors benefits would provide some income until children are 17 or 18.

[krantcents]

The amount of insurance is personal and specific to your individual needs. If one of you died, could the other continue without financial difficulty. At your ages, term insurance is very cheap and coverage is just a matter of choice. Since you do not mention children, will you have some in the future? You may consider how that would change your thinking. You may consider term insurance for an extended period of time such as 10-20 years. You can drop it at anytime, but it guarantees the premium while you are young and healthy. I am probably raising more questions to think about than answers, but it is a personal decision.

[edg126]

I am 32, my wife 32, with 1 year old twins. We purchased 30 year term for 750K each. I pay 540 a year, my wife about 450.

I make 100K, she makes 50K, but we aren't saving for college for the kids because she works at a university, so if she dies part of her life insurance would go to funding that.

We both also get 2x salary life insurance from our employer.

Buying insurance without kids is a bit of a calculation. Before kids, if I or my wife passed away, we'd sell the house (no reason for 1 person to live in a 2000 sqft house) so we don't need to pay the mortgage, just enough to cover some expenses, which our company's life insurance policy would cover.


Now that we have kids, a 20 year policy wouldn't cover it, we'd need for her to be at least 22 years until the kids graduate for college. For me, making 2x what she does I wanted to have her covered. So it might be cheaper to get the 30 year rate now instead of when you have children.

Oh, and on the blood test my wife failed her cholesterol levels (I think it was cholesterol) because it was too high, which happens during pregnancy, so we had to get a 10 year policy for the first year, then cancel it and redo the test again to get the 30. It wasn't too much of a hassle, but something to keep in mind to avoid or do it early enough in the pregnancy.

[YolandoAmaya]

Selecting an insurance plan is really a hard work, you have to know all the information about which kind of life insurance is there, firstly you have to know how to select an insurance plan, focus on following tips:
Term insurance is the most basic, and generally less expensive.
Declining Balance Term insurance.
Return of Premium Term insurance will repay you the amount you spent in premiums in the event you outlive the term of the policy.

[pomala6]

You can bear minimum $ 500 each and you can also maximum price of policy more.

[molly1]

Really, it is very important to have at least one life insurance, so that after you also there is no any need to do adjustment to your family member. Hence, accidental or any other reason can’t affect your family’s life style. You may have to calculate your average income and according to that about 30% amount can be used for insurance.