Author Topic: Help me decide on life insurance term and price please?  (Read 647 times)

lilybluerose

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Help me decide on life insurance term and price please?
« on: December 10, 2018, 06:38:34 PM »



« Last Edit: December 12, 2018, 05:31:33 AM by lilybluerose »

cchrissyy

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Re: Help me decide on life insurance term and price please?
« Reply #1 on: December 10, 2018, 09:48:41 PM »
one good way to get the cost down is to make a ladder of a 10 year policy and a 20 year policy.  the shorter terms are much less expensive. So maybe what you need is 500k 10 year and 250k 20 year? that way you have the 750k coverage when the kids are small but drops down to 250k if that sounds ok with you in the following decade?

cchrissyy

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Re: Help me decide on life insurance term and price please?
« Reply #2 on: December 10, 2018, 09:50:08 PM »
also, if you are not already aware, if one of you passed away with kids at home, there are social security survivor benefits for the kids and spouse. you should both log in to your SS accounts online and find out what that figure would be.

wawot1

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Re: Help me decide on life insurance term and price please?
« Reply #3 on: December 10, 2018, 10:08:32 PM »
I'm not an expert on this, but my personal experience with term life insurance was:

Bought a policy about 10 years ago, guaranteed (fairly low) premium for 10 years, then with a dramatic rise in premium costs at year 11.

This year (year 9 of the policy), did minimal shopping around and got a different term life insurance policy, for double the coverage at about the same premium as I was paying before, with guaranteed (fairly low) premiums for 10 years.   

I hope that by the time this policy has dramatic premium increase, after 10 years, I won't need it anymore!

Good luck


lilybluerose

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Re: Help me decide on life insurance term and price please?
« Reply #4 on: December 11, 2018, 05:19:22 AM »
Ty so much for the replies!

YttriumNitrate

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Re: Help me decide on life insurance term and price please?
« Reply #5 on: December 11, 2018, 12:10:47 PM »
I am 31 years old. My husband is 37
We have a four year old daughter, and I am due with our second child in August 2019
....
​Gross combined income is around 100-115k with Me making the majority of that...
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We have around 25k saved so far which took a little under two years.
...
What I am considering though would be for us both to just get the 300k for 20 years only, and focus on really being frugal and working on upping our retirement savings and such. Is this a horrible idea? ​

My vote is for "horrible idea." Even if you focus on being frugal, you dying January 1, 2020 would be a catastrophic financial hit if the insurance policy was only $300k.

lilybluerose

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Re: Help me decide on life insurance term and price please?
« Reply #6 on: December 11, 2018, 01:09:30 PM »
Would 500 suffice a piece you think?

YttriumNitrate

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Re: Help me decide on life insurance term and price please?
« Reply #7 on: December 11, 2018, 01:46:43 PM »
Would 500 suffice a piece you think?
My suggestion would be:
Husband = $250k, 10 year term = ~$11 month
You = $1M, 20 year term = ~$27 a month

https://www.zanderins.com/

SimpleCycle

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Re: Help me decide on life insurance term and price please?
« Reply #8 on: December 11, 2018, 02:15:00 PM »
There are too many unknown variables here to give you good advice, but in general, this is a math/budgeting problem.

Here's how I thought of it myself, from a Mustachian perspective.

Our FIRE number is $1.5M.  We'll be there in 15 years at the latest, at which point we are fully self-insured and don't need life insurance anymore.  Right now we're a little less than halfway there, so the "gap" we need to cover with insurance is about $750k.  And survivor benefits for both of our children would be about $32k a year, or about half our expenses, until they turn 18.

So if we died tomorrow, the children would have $32k a year in survivor benefits until 18 and $32k in 4% rule from our assets, which is PLENTY to support them.  So basically, we don't need life insurance for the scenario where we both die.

However, if one of us were to die, we wanted a situation that doesn't preclude FIRE for the other person, plus some breathing room for the surviving spouse to do whatever they need to do to survive/thrive as a widow and single parent.  So for us, that means that we close the gap to FIRE left by our lost wages, and social security survivors benefits become that breathing room.  So the amount of insurance we "need" is $250k for me and $500k for DW for a 15 year term.  We actually have more than that, because we were further from our FIRE goal when we purchased life insurance, but if I were buying now, that's what I'd get.

DadJokes

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Re: Help me decide on life insurance term and price please?
« Reply #9 on: January 15, 2019, 08:47:55 AM »
Adding to this thread instead of starting another...

Is there any reason to continue to have life insurance (outside of maybe enough to cover burial) once you've reached FI? I currently have a 30 year $300k term policy. Aside from the amount being too little to replace my income, I'm considering reducing the term to 20 years, which is our anticipated FI date. It looks like the annual premium would only be $156 less, but it would include $100k more payout.

ReadySetMillionaire

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Re: Help me decide on life insurance term and price please?
« Reply #10 on: January 15, 2019, 10:37:34 AM »
Adding to this thread instead of starting another...

Is there any reason to continue to have life insurance (outside of maybe enough to cover burial) once you've reached FI? I currently have a 30 year $300k term policy. Aside from the amount being too little to replace my income, I'm considering reducing the term to 20 years, which is our anticipated FI date. It looks like the annual premium would only be $156 less, but it would include $100k more payout.

I fully intend to let my term life insurance lapse when we are FI and are kids are no longer dependent on us.