How Much Life Insurance Do You Have?

[YK-Phil]

I only have insurance through the plan my employer provides, which amounts to three times my annual base salary. We have no mortgage or consumer debt and enough set aside for retirement so I don't plan to purchase life insurance after I leave this job in 18 months.

[Ferrisbueller]

I'm 44 wife 39, 3 kids 7,5,2.
As young (ish)normal weight non smokers term life cover is comparatively good value as is the mortgage insurance.

Our aim is that if either of us die the house is paid off and enough money will be available for whos left to never have to work again or want for anything (within reason)

On death
Joint life cover of $600,000 over 20 years
Mortgage insurance $450,000 (pays off remaining mortgage on house worth $1M if me or wife dies)
Through my work (they pay)if I die €$450,000 lump sum and pension for wife of $30,000pa
Through wife's work (they pay) if she dies $250,000 lump sum and pension for me of $20,000pa

On sickness or disability
We both have disability cover through work (they pay)which pays us 50% of base salary each year until age 65 or return to work (26 week waiting period)

Obviously we have car, home insurance etc

[Ferrisbueller]

I forgot pensions vest also giving about €250k if I snuff it and around €150k if wife snuffs it

[Rage]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

[Drifterrider]

I have no life insurance.  I never have had.  I have no children to support.

You should have seen the startled look on the first sergeant's face in basic training when I explained my rationale for NOT buying life insurance.  :)

 

[begood]

My slightly altered equation:
If your kids are 10 and over, have insurance for 10x annual spending MINUS savings. Cover your mortgage if you wish but only what will be left after 10 years.

Okay, nereo, for the math-challenged among us (which may be a cohort of one!), can you explain what "MINUS savings" means here?

My only kid is 13, so check that first box.
10x annual spending would be $700K (not looking for face-punches, just stating the facts)
MINUS... what savings?

If my mister died, I'd have to rent or buy housing - our current housing is provided by his employer.

We're meeting soon with our financial dude/insurance agent (I know! I know! I'm working on it, geez...) and I'd like to have a game plan going in. If I can nail this equation down, it would help a lot!

[Kris]

None.  Husband's kids are adults now, I don't have any, and our net worth is such that if one of us died, the other would have more than he/she will ever need.

[Rage]

My slightly altered equation:
If your kids are 10 and over, have insurance for 10x annual spending MINUS savings. Cover your mortgage if you wish but only what will be left after 10 years.

Okay, nereo, for the math-challenged among us (which may be a cohort of one!), can you explain what "MINUS savings" means here?

My only kid is 13, so check that first box.
10x annual spending would be $700K (not looking for face-punches, just stating the facts)
MINUS... what savings?

If my mister died, I'd have to rent or buy housing - our current housing is provided by his employer.

We're meeting soon with our financial dude/insurance agent (I know! I know! I'm working on it, geez...) and I'd like to have a game plan going in. If I can nail this equation down, it would help a lot!

I think he means that you basically want to have enough money to get you through the next 10 years - enough time to get back on your feet.  Insurance agents generally argue that if one spouse dies the other should be set for life at their current comfort level - i.e. they want you to buy a fuck ton of insurance.  But nereo is arguing that 10 years is good enough.  So, figure out how much you need to get through 10 years (based on current spending), subtract how much you already have saved up, and that's how much life insurance you should get.

[begood]

My slightly altered equation:
If your kids are 10 and over, have insurance for 10x annual spending MINUS savings. Cover your mortgage if you wish but only what will be left after 10 years.

Okay, nereo, for the math-challenged among us (which may be a cohort of one!), can you explain what "MINUS savings" means here?

My only kid is 13, so check that first box.
10x annual spending would be $700K (not looking for face-punches, just stating the facts)
MINUS... what savings?

If my mister died, I'd have to rent or buy housing - our current housing is provided by his employer.

We're meeting soon with our financial dude/insurance agent (I know! I know! I'm working on it, geez...) and I'd like to have a game plan going in. If I can nail this equation down, it would help a lot!

I think he means that you basically want to have enough money to get you through the next 10 years - enough time to get back on your feet.  Insurance agents generally argue that if one spouse dies the other should be set for life at their current comfort level - i.e. they want you to buy a fuck ton of insurance.  But nereo is arguing that 10 years is good enough.  So, figure out how much you need to get through 10 years (based on current spending), subtract how much you already have saved up, and that's how much life insurance you should get.

Thanks, Rage! So in our case, we have a stash that equals more than 10x expenses, so we probably don't need as much insurance as we have. That's part of what we want to discuss with the dude - at a minimum having the dividends offset the premiums as much as possible.

[Rage]

Thanks, Rage! So in our case, we have a stash that equals more than 10x expenses, so we probably don't need as much insurance as we have. That's part of what we want to discuss with the dude - at a minimum having the dividends offset the premiums as much as possible.

And if you have a stash equal to 10x your expenses I'm guessing you also probably qualify for very healthy Social security survivor benefits.  Be sure to ask your insurance agent, I'm sure he'll love to talk about it. 

When I look at what would happen to my son if both my wife and I died - my wife's brother and his wife would raise him, and they would get 2x each of our salaries (free through work), they would get our home, with about $150K in equity, they would get everything we own - cars, computers, everything - and they would get all of our monetary assets which are not negligible, and they should be smart enough to apply for survivor benefits on our son's behalf, amounting to probably around $3800/month. Why would I need life insurance on top of that? 

In terms of what my wife would get if I died - $1885/mo as listed above, plus all the assests we have already, plus $1885/mo until our son is 18.  The $1885/mo is all she should need to get her through until her retirement at which point she'll get $2500 in survivor retirement benefits plus her own retirement benefits which I calculated would be about $1050/mo if she quit working now and never worked again (using the calculator on the SS website).

I don't know about the specifics of your situation, but I really don't think most people who are earning and saving a decent amount of money need life insurance. 

[begood]

Thanks, Rage! I appreciate the breakdown. I know some term life on my husband is expiring next year - we won't renew that. I have some term until age 75, which seems kinda dumb, now that I look at it - we bought a 30-year term policy at 45. We might just cancel that. We were with a different financial dude then - I fired his ass, but didn't review what we'd done with him in terms of insurance.

We have old whole life policies that we're continuing to feed through annual premiums. Mine is 45 years old, my mister's is 25 years old, and my daughter's is 12 years old (just at the "at this point, might as well keep it" stage). My husband considers them a bond-like portion of our asset allocation, which allows us to go 75% in equities. So far we have considered them somewhat sacred cows, but it might be time for the dividends to start offsetting the premiums, at a minimum.

[Retire-Canada]

I'm always curious how much life insurance people have, especially those with kids - or if they have it at all.

I have no life insurance at all. No kids. All my investments and property are willed to my GF and my cat. She can retire the moment I die and both of them can live comfortably for the rest of their days on Earth.

I can't see how life insurance would help them more.

-- Vik

[Capsu78]

BeGood said:

"My husband considers them a bond-like portion of our asset allocation,"

We are in the same situation with some aged whole life products from my wifes childhood, and our "young parent" stage.  I know I will never again mix my "insurance with my investments" but I cant find a compelling reason to cash them out early.  Does anyone make that case?

BeGood- what value does your husband place on them? _current cash value or paid off policy value?  I like the "treating them like bonds" approach but want to be careful with my assumptions.

[Unique User]

I have 2x salary at work, DH has 1x salary.  We each have $750k 20 year policies we bought when DD was born 13 years ago.  We went with the 10x spending plus mortgage calculation.  Never even thought about SS survivor benefits.  We'll be FI before they run out and I doubt we'll get more.   

[begood]

BeGood said:

"My husband considers them a bond-like portion of our asset allocation,"

We are in the same situation with some aged whole life products from my wifes childhood, and our "young parent" stage.  I know I will never again mix my "insurance with my investments" but I cant find a compelling reason to cash them out early.  Does anyone make that case?

BeGood- what value does your husband place on them? _current cash value or paid off policy value?  I like the "treating them like bonds" approach but want to be careful with my assumptions.

Capsu78, I just asked him, and he said it's the current cash value that he counts toward our allocation. It's about 5% of our total stash. Obviously if we allow dividends to offset premiums, the cash value will grow more slowly. He wants to make sure that if we do that, we use the difference wisely and don't just piss it away on hookers and blow.

And I haven't had anyone say we should cash in old whole life - the horrific part is over, apparently, after 12 years or so. We'd never buy it again, obviously. We're just letting it ride and debating how much or whether to continue with term life. We have five years of private school tuition, college, and a house to go, so I'd want to make sure we had enough to cover that AND retire eventually.

[3okirb]

Insurance for the average person is to cover your financial goals in case you die before you can accomplish them.  There are some people that need it to pay taxes, etc. on property without having to sell it, or to cover the SS that would be lost if a spouse dies.  Some people want it to replenish retirement money that's spent on long term care when a spouse dies that didn't have a LTC policy.  Some people want a little extra so they can take time off to be with kids if a mother/father dies.

That being said, there are a lot of factors that go in to the proper amount.  You need enough, but not too much.  The best is to find an agent that doesn't need to make a sale and have them walk you through a "real" process to figure out how much you need.  (Not a "sales" process).

For me, it's $2.5million.  For my wife, it's $400,000.

[retired?]

I recall a conversation about 5 years ago with a couple friends.  One, quite correctly, noted that it is not income replacement but to cover expenses.  There are "guidelines" out there that one should have X times pay in insurance...with no regard to actual expenses.  Reminds me of the common advice to save enough to have 70-80% of pre-retirement income.

It is not income that matters, but expenses.

that said, I am half way into a 10-yr term policy for $1M.  The firm tried to sell more and for a longer term, but I knew/expected that by 50 I would have enough in savings to not need any insurance. 

Once kids are gone (unless you have massive debt and your spouse cannot support themselves), there is no need for life insurance at all....in my opinion.

[begood]

Once kids are gone (unless you have massive debt and your spouse cannot support themselves), there is no need for life insurance at all....in my opinion.

This is interesting... that would be nine years for us, if our kid chooses to go to a four-year school and graduates in four years (the most common scenario in the community we're part of). I need to add up what our whole life policies pay out, compare that with the terms and come up with a number that covers all the education and a house, and leaves the stash to do its thing.

[MayDay]

We have a net worth of about 300k and kids age 5 and 7.  H works, I stay home.

We have 1 or 2 times H's annual salary thru his job.  He has health issues so we've never tried to purchase an individual policy.  If he died, between the kids' SS, the insurance, and the money we already have saved, I would be fine for a long time,possibly forever, and certainly fine if I got a job of virtually any type.  If I died, the kids are school aged now, so childcare costs are minimal, and h would certainly have to spend more money on convenience things like food and a housecleaner, but overall the budget would still be in the black. 

I'm just not that worried about it.  If either of us died, the remaining spouse would prioritize moving close to a set of grandparents for help as well possibly even into a cohousing situation of some type. 

[rpr]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

I think that when your child reaches 18, your spouse gets zero unless spouse is at retirement age which I assume is at least 62+. Assuming that your spouse is 50 when your child reaches 18, then the 12+ year gap maybe a long one unless there are other financial resources to tap. Just something to watch out for.

[deborah]

In Australia it is often automatic through our equivalent of 401k (that also makes it tax exempt here). It was free when I worked. FIRE now, so we have none.

[retired?]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

I'll have to look, but that sounds quite generous based on my own SS benefit projection.  Where did you look it up?  Same website that shows your expected SS benefit (i.e. non-survivor). 

Are the spouse and child additive?  Asking since the numbers are the same.

[Rage]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

I'll have to look, but that sounds quite generous based on my own SS benefit projection.  Where did you look it up?  Same website that shows your expected SS benefit (i.e. non-survivor). 

Are the spouse and child additive?  Asking since the numbers are the same.

This information is from the SS website - you can create a username and password based on your SSN and other information (I think they make you look up how much you made last year or something like that).  They also send you a statement once a year with this info.

Yes, the spouse and child are additive, up to a "family maximum" which is something like $4K/mo.  So if you have 2 or more kids you max out the benefit.

You can also use a calculator on the SS website to figure out how much money you'll get at retirement if you stop working right now.  For me, if I stop working right now, I can collect $1060/mo at age 62.

[Emilyngh]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

I'll have to look, but that sounds quite generous based on my own SS benefit projection.  Where did you look it up?  Same website that shows your expected SS benefit (i.e. non-survivor). 

Are the spouse and child additive?  Asking since the numbers are the same.

This information is from the SS website - you can create a username and password based on your SSN and other information (I think they make you look up how much you made last year or something like that).  They also send you a statement once a year with this info.

Yes, the spouse and child are additive, up to a "family maximum" which is something like $4K/mo.  So if you have 2 or more kids you max out the benefit.

You can also use a calculator on the SS website to figure out how much money you'll get at retirement if you stop working right now.  For me, if I stop working right now, I can collect $1060/mo at age 62.

I do think that looking into it and then taking it into account when planning life insurance is a very good idea.

I also have taken it into account, but my amount is not nearly as high as yours.

[Villanelle]

Way too much.  DH has a weird thing about this.  In the end, it doesn't cost all that much so it's not a hill I'm willing to die, or even fight, on. 

When we got our insurance, it was before we moved overseas, so I was working, though my income was about half his.  He and I both have policies from the military (very low cost), which will end when he retires from service. His is more than mine.  We also have additional policies, again, him more than me.

However, I am no longer working.  If I died, DH would be better off financially, simply because he'd be covering one fewer person's expenses.  We don't have kids. 

I'd be in worse shape, because I'd need to relocate to the US very quickly (the move would be paid) and find a job, but our savings and investments, as well as the what I'd get from the military, could sustain me for a long time.  I'd be fine with cutting both our policies way down, to at least just what we get through the military ($400k for him and $100k for me), if not less as the military coverage isn't free. I think we currently have 750k and 250k total, respectively.  But it's a rare irrational expense for DH, so I'm fine indulging it. 

[TreeTired]

I had term life insurance when my 2 kids were younger.  When I was working my employer provided 2x my salary, and when the job ended I signed up for 10 yrs of $250k term life.  Not "enough"  per formulas, but it turned out to be more than I needed. Part of me said if I die I want my widowed wife to go back to work!    Now that my 2 boys are grown, and neither my wife nor I am working, we have no life insurance.   One less person to support if either of us kicks!

[retired?]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

I'll have to look, but that sounds quite generous based on my own SS benefit projection.  Where did you look it up?  Same website that shows your expected SS benefit (i.e. non-survivor). 

Are the spouse and child additive?  Asking since the numbers are the same.

This information is from the SS website - you can create a username and password based on your SSN and other information (I think they make you look up how much you made last year or something like that).  They also send you a statement once a year with this info.

Yes, the spouse and child are additive, up to a "family maximum" which is something like $4K/mo.  So if you have 2 or more kids you max out the benefit.

You can also use a calculator on the SS website to figure out how much money you'll get at retirement if you stop working right now.  For me, if I stop working right now, I can collect $1060/mo at age 62.

Great.  Thanks.  I have seen the latter calculator, but not the survivor benefit one.  I haven't received a statement in a few years.  I recall they stopped them (unless you requested a paper copy) but were supposed to start sending again regardless.

The part that also seemed confusing to me is that the benefit you quoted was much beyond what I'd receive at 62.....i.e. we are worth more dead.

I had always used some multiple of pay at work and then, at 40, decided to add a 10-yr term coverage.....a) since my NW was lower and b) since I may not always have employer coverage.

Now that we are borderline FI, I will have to check out the survivor benefit.  This info might result in real savings.

[ShaneD]

None. Married, no kids.

[rubybeth]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

This is true for couples with kids, but for couples without children, or children who are older no longer minors, insurance could still be a good idea. Yes, my spouse can claim my benefits at retirement age, but we plan to retire much sooner than that, or at least be able to cut back to part-time work.

[Goldielocks]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

Good point -- I looked into the Canadian Benefits.

Canadian Pension Plan, CPP, which is a pension earned by years of service/ paying into it as you are employed:
Assuming under 65 -- with at least one child..The child payments end at 18 or 25 if in school full time.

The monthly CPP Survivor Payout currently = $176/month + 37.5% * CPP amount that the deceased spouse had acrued to date + $228 x (# kids).    Indexed to CPI yearly.

plus
The Lump sum Death benefit (one time) is up to $2500.. so for early death, this may be only $1000...

For my death, that works out to $875/month with two kid and $645/month with one kid, maybe $1000 lump sum.  Amount falls to $415/mo after kids age out, but before reaching 65 yrs.
In the event of my husband's death, who has only 7 years of CPP contributions, and not all of them full years, I would get  $550 to $735 / month.  Amount falls to $200/mo when kids age out, but before 65 years.

After 65 - regular CPP applies at 60% the normal rate + flat amount.

Note -- It is much less if you are under 45 and have no kids, as it is discounted heavily the younger the remaining spouse is.

So - what is the approximate Present Value (PV) of this CPP Survivor benefit, if it were somewhat analogous and compared to an Insurance lump sum? 

My death- the PV  of a series of future payments of 875 (for 7 years); 645 for another 4 years; 415 for 10 years, until normal retirement is :$144k (approx)
For SO death- PV (present value)  of $700/mo ( 7 years), $550 (4 years); $200/month (10 years) = $103k

(Ignoring taxes, assuming both were paid today, 3% CPI increases, 3% interest)

_____________________________________________________

Anyway, my insurance renewal packet came, so this was a good time to review...

We have on me (in addition to the above value of $144k): $400k term + $200k at work.   
On my SO I have $250k term

It is a lot, but with our gargantuan mortgage, I would not expect the remaining family to HAVE to move within 5-10 years (until kids are done with school) -- so this insurance amounts to about 8+ years of expenses (DH is not frugal), and is conservative in case DH becomes disabled.   2/3 of our savings are dedicated to retirement after 65, so much less is available to offset  near term living costs.   

For my SO, well, I am expecting him to work in future so I can reduce my time off, this means another $250k would do that if he was not around, less as we save more for early retirement.  It is about 7 years of his future earnings, after taxes. But hey, I am more frugal.   

As others have pointed out, the added term insurance is costing (on me) $73/yr per $100k.   I would only discount by $150/yr on my premiums... leaving DH with the equivalent of 5 years of non-frugal living expenses. I will have to think about it.

[boarder42]

i have a 300k stash built up that will be 500-700k by the time my wife and i have are first kid.  i'd say thats pretty damn good life insurance and it keeps growing and growing and growing.

[3okirb]

i have a 300k stash built up that will be 500-700k by the time my wife and i have are first kid.  i'd say thats pretty damn good life insurance and it keeps growing and growing and growing.

Life insurance bridges the gap between where you are now and where you want to be.  If you want to pay for your kids' college, you get life insurance to cover college until you have the money to cover college.  Same for retirement and any other financial goal that you have.  When you're young, you can buy over $1million of life insurance for less than $20/month.  Doesn't really make much sense not to unless your don't have kids and your spouse will be 100% comfortable with the amount you have (or the amount s/he makes) without you.

[boarder42]

correct all things i have and i'd rather pay myself 20 bucks a month than some insurance company.  we're DINKS and when we have our first kid she will still plan to work.  and will have probably over 600k in retirement funds.  so there is no reason to pay someone for insurance.  i may as well play the power ball.

[3okirb]

correct all things i have and i'd rather pay myself 20 bucks a month than some insurance company.  we're DINKS and when we have our first kid she will still plan to work.  and will have probably over 600k in retirement funds.  so there is no reason to pay someone for insurance.  i may as well play the power ball.

To play devil's advocate, if you have no gap to bridge, why aren't you already retired?

[boarder42]

My wife makes around what i make as we are both engineers. I can survive with out her she can survive without me.  its crazy how risk averse 60% of this forum is ... Its a tax on those who have planned their lives poorly.  or those in crazy circumstances like ACG who has brain cancer and found someone who would give him a pretty awesome policy with out checking that. 

Do you not trust your partner can support themselves ... why would i have to be FI to not need life insurance.  If i die i leave my partner with enough in retirement accounts to fully pay off our mortgage if she wanted to.  by the time we have kids in a couple years our accounts will be 3 years away from FI.  what bridge does she need? 

is your goal to die and get your partner to FI thru death i guess if thats the case life insurance makes sense.  but we live on less than my wife makes so i think that with our giant stache she could support herself even before we are FI. should i die... and i make more so i could support myself too.

[gaja]

Privately we have bought enough to cover the mortgage. Through work I have a bit more. We also have disability insurance, which was very nice when DH got couldn't work for a couple of years. It is not a lot of money, but every bit helps.

[Arzosah]

I don't have any life insurance - no kids, its just not needed.  Either my estate could pay the funeral expenses or my executor would, and claim it back off my estate. 

The thing I *don't* have, and probably won't be getting now, as I'm so close to ordinary retirement age, is critical illness cover.  Might need a separate thread for that.

[Miss Prim]

After I retire, it will be none!  I only had a policy through work and bought a policy for my DH that would have paid $25,000.  We don't really need it because either one of us would be fine if the other one died.  Hubby would probably remarry and knowing him, it would be someone with more money than him!  I wouldn't remarry, but I would definitely downsize and still be fine.   

My kids are grown and have good jobs, so I don't see any need for life insurance.

                                                                                         Miss Prim

[seattlecyclone]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

This is true for couples with kids, but for couples without children, or children who are older no longer minors, insurance could still be a good idea. Yes, my spouse can claim my benefits at retirement age, but we plan to retire much sooner than that, or at least be able to cut back to part-time work.

To expand on this, the kids get their benefits until they turn 18 (or until as late as their 19th birthday if they're still in high school). The spouse only gets benefits until the youngest kid turns 16. There's a family maximum that's 2.33x whatever your child/spouse individual benefit is (so you get the full amount for the first child and spouse, less for the second child, and nothing for additional children). If the spouse keeps working and earns more than a certain amount, it can reduce their benefit (but if you have at least two kids that might not matter so much since you can just use the family maximum on your kids instead of your spouse).

In my personal situation, my wife and I don't have kids yet. If I were to die tomorrow, I would trust her to do just fine on her own. She would likely have to keep working for a while, but we're not going to buy any insurance for her sake alone. If we did have kids, I would probably want to make sure we had enough (through our current stash, social security benefits, and any life insurance) to make sure that the surviving parent could retire right then and there. Being a single parent would be hard enough to deal with, I wouldn't want to skimp on life insurance to the point where she would have to keep working besides. It does appear that the social security benefits plus our current stash would be enough to make life insurance unnecessary in our case even if we did have kids, but your situation may vary.

[The Fake Cheap]

My wife and I are in our mid 30's and have one child, 1 1/2.

We have our mortgage life insured, so house paid in event either of us move on.
I have a 20 year term for 100K
I also have 2x annual salary through work for about 120K
Wife has 2 times her annual salary through work for about 100K
I also have a free policy through work that provides 5K. 

These polices combined with what CPP would pay (which I haven't bothered to look up), plus current investments we have would certainly go along way.  Not enough for myself or my wife to be FI, but no one would be worrying about money for the next decade or so at minimum. 

[soccerluvof4]

zero- 2 kids in HS 2 younger but one of us would be fine without the other if that happened. We did have up until about 2 years ago.

[boarder42]

DH and I each have $300k individual term policies, plus the maximums out workplaces provide (I think for me it's like $30k, for him it might be $25k).  No kids. We got our policies after being married a couple years, so incomes were lower, but it seems like a good amount. We'll FIRE before the term runs out.

just wondering why you have insurance with no kids ... could you not support yourself should the other pass.  this to me is a gross waste of resources .

[boarder42]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

This is true for couples with kids, but for couples without children, or children who are older no longer minors, insurance could still be a good idea. Yes, my spouse can claim my benefits at retirement age, but we plan to retire much sooner than that, or at least be able to cut back to part-time work.

Is your spouse completely incapable of living a life and earning money if you die?  I just dont understand the concept behind this on a site where everyone is saving huge amounts of money annually. 

[rubybeth]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

This is true for couples with kids, but for couples without children, or children who are older no longer minors, insurance could still be a good idea. Yes, my spouse can claim my benefits at retirement age, but we plan to retire much sooner than that, or at least be able to cut back to part-time work.

Is your spouse completely incapable of living a life and earning money if you die?  I just dont understand the concept behind this on a site where everyone is saving huge amounts of money annually.

Well, obviously, each case is unique.

For our logic, read on... we are still at the beginning of our savings (started stashing about 2 years ago), and I out-earn DH by more than double. Right now, DH is also a grad student and will likely quit his job within a few months to complete the internship component of his degree. We don't own a home, no kids. Also, he has a chronic medical condition which could eventually make working very difficult. If he died today, I would be fine financially, though I'd have to work much longer to reach FI, but if I died, he would lose the income that's paying for our living expenses and his tuition, and he wouldn't want to touch our stash. I also imagine that if either of us died, the other would be quite upset, and having the life insurance money would give the survivor some options (like take leave of absence from work). Also, we both like the idea of our secondary beneficiaries ending up with some money if we both concurrently (mine goes to my sister, his goes to a close relative) because neither of those people are saving very much and it would make their lives easier after our deaths.

Keep in mind that it's term life insurance, so once the term is up and our stash is huge, we can drop it. A total of $600k in coverage between the two of us (that we purchased in our late 20s) is not costing us much at all. If we dropped the coverage and then tried to get the same level, we'd pay much more today in our early 30s, and likely DH would pay quite a bit more because of his now-diagnosed chronic medical condition.

We also know people who have died suddenly or after a very unexpected illness, and and the lack of life insurance in some of those instances has been heartbreaking. I know it doesn't make sense for every person to have coverage, but in our case, it's given us peace of mind and the idea of options in the face of tragedy.

[rubybeth]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

This is true for couples with kids, but for couples without children, or children who are older no longer minors, insurance could still be a good idea. Yes, my spouse can claim my benefits at retirement age, but we plan to retire much sooner than that, or at least be able to cut back to part-time work.

Is your spouse completely incapable of living a life and earning money if you die?  I just dont understand the concept behind this on a site where everyone is saving huge amounts of money annually.

Well, obviously, each case is unique.

For our logic, read on... we are still at the beginning of our savings (started stashing about 2 years ago), and I out-earn DH by more than double. Right now, DH is also a grad student and will likely quit his job within a few months to complete the internship component of his degree. We don't own a home, no kids. Also, he has a chronic medical condition which could eventually make working very difficult. If he died today and we had no insurance, I would be fine financially, though I'd have to work much longer to reach FI, but if I died, he would lose the income that's paying for our living expenses and his tuition, and he wouldn't want to touch our stash. The insurance helps to replace the income either of us would have made over the next 10 year until FIRE. I also imagine that if either of us died, the other would be quite upset, and having the life insurance money would give the survivor some options (like take leave of absence from work). Also, we both like the idea of our secondary beneficiaries ending up with some money if we both die at the same time (mine goes to my sister, his goes to a close relative) because neither of those people are saving very much and it would make their lives easier after our deaths.

Keep in mind that it's term life insurance, so once the term is up and our stash is huge, we can drop it. A total of $600k in coverage between the two of us (that we purchased in our late 20s) is not costing us much at all. If we dropped the coverage and then tried to get the same level, we'd pay much more today in our early 30s, and likely DH would pay quite a bit more because of his now-diagnosed chronic medical condition.

We also know people who have died suddenly or after a very unexpected illness, and and the lack of life insurance in some of those instances has been heartbreaking. I know it doesn't make sense for every person to have coverage, but in our case, it's given us peace of mind and the idea of options in the face of tragedy.

[Arzosah]

Keep in mind that it's term life insurance, so once the term is up and our stash is huge, we can drop it. A total of $600k in coverage between the two of us (that we purchased in our late 20s) is not costing us much at all. If we dropped the coverage and then tried to get the same level, we'd pay much more today in our early 30s, and likely DH would pay quite a bit more because of his now-diagnosed chronic medical condition.

We also know people who have died suddenly or after a very unexpected illness, and and the lack of life insurance in some of those instances has been heartbreaking. I know it doesn't make sense for every person to have coverage, but in our case, it's given us peace of mind and the idea of options in the face of tragedy.

Thats a lovely thoughtful on the part of both of you, really something.

[ender]

You guys with insurance are all crazy.  As mentioned a few times, Social Security has survivor benefits.  You should look them up, instead of just repeating what your insurance agent told you about needing 10x salary or whatever.  For me it looks like this:

My child (presumably until age 18?) - $1884/mo
My spouse - $1884/mo
My spouse at full retirement age - $2512/mo.

If I understand that correctly, while my wife is raising our child, she'll receive $45,216/year from social security.  Coupled with even a modest nest egg, that is enough to retire immediately and spend the rest of her life mourning my passing.

I'll have to look, but that sounds quite generous based on my own SS benefit projection.  Where did you look it up?  Same website that shows your expected SS benefit (i.e. non-survivor). 

Are the spouse and child additive?  Asking since the numbers are the same.

This information is from the SS website - you can create a username and password based on your SSN and other information (I think they make you look up how much you made last year or something like that).  They also send you a statement once a year with this info.

Yes, the spouse and child are additive, up to a "family maximum" which is something like $4K/mo.  So if you have 2 or more kids you max out the benefit.

You can also use a calculator on the SS website to figure out how much money you'll get at retirement if you stop working right now.  For me, if I stop working right now, I can collect $1060/mo at age 62.

This is perfect timing - my wife and I are just doing life insurance applications.

I had no idea Social Security works like that, we definitely will not need as much as we applied for on me that's for sure!

Thanks for saving us quite a bit for quite a few years :)