Author Topic: Do you have life insurance? What do you pay for it?  (Read 8303 times)

FoundPeace

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Do you have life insurance? What do you pay for it?
« on: February 12, 2015, 11:40:53 AM »
So I get life insurance through work. I have a wife who is a SAHM and 2 kids. Although we are saving a lot of our income, it seems to make a lot of sense to me.

I pay $50.44 per year or $1.94 every other week. It covers one year of salary. This seems like a no brainer to me, because it would take just under 100 years of investing this amount of money (in today's dollars at 4%) to equal the value of the payout. I won't pay for it after I am FI. Right now though, it makes a lot of sense.

Do you have life insurance? If so, what do you pay for it and why do you keep it?

lizzie

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Re: Do you have life insurance? What do you pay for it?
« Reply #1 on: February 12, 2015, 11:49:05 AM »
I pay $340/year for a $1 million policy. It's a 15-year term policy that will expire a couple of years after my kids (should be) finished with college. I don't plan to renew after that; I bought it to help cover the cost of childrearing and college.

Oh, I wanted to add: I personally shy away from getting insurance through work (not saying there's anything wrong with you getting such insurance). Because of a quirk in federal law, all of those employer-provided policies are governed by federal law instead of state law. Without getting into too much boring detail, federal law makes it much, much easier for the insurer to screw you over.
« Last Edit: February 12, 2015, 11:55:45 AM by lizzie »

Gone Fishing

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Re: Do you have life insurance? What do you pay for it?
« Reply #2 on: February 12, 2015, 11:56:29 AM »
The company gives me 1.5x my salary as part of my package.  I have never bought more.  After I retire I will not buy any either.  If I had not had any from work I probably would have bought a $200-$250k 10-15 year term policy when we had kids. My wife only works part time but she is well educated and has good earning potential if need be.  I have never had insurance on her.  At this point, we are self insured. 

seattlecyclone

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Re: Do you have life insurance? What do you pay for it?
« Reply #3 on: February 12, 2015, 12:15:30 PM »
My company pays for a ridiculously huge life insurance policy for its employees. At this point our stash is big enough and my wife's earning potential high enough that I wouldn't purchase a policy on my own.

catccc

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Re: Do you have life insurance? What do you pay for it?
« Reply #4 on: February 12, 2015, 12:28:09 PM »
DH and I have 30 year term policies that we bought when we were 28 and 30, right after we had our first kid.  We are insured for $500K and $400K respectively, and our premiums are $319 and $348 annually.

30 years is kinda on the long side, but the thought was we wanted to have it at least until the kid had finished college, so a 20 year term was a bit on the insufficient side for us.  (I was 23 when I finally finished school)  We were good savers, but FI wasn't really part of the plan at the time.  And we knew we wanted more that one kid, and that would happen later, so that led us to settle on the 30 year term.

DH and I have very different earning potentials, but I think with our current stash and the insurance proceeds, either of us would be okay if something happened..


jms493

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Re: Do you have life insurance? What do you pay for it?
« Reply #5 on: February 12, 2015, 12:30:46 PM »
37 male with wife and 1 child - Non Smoker and healthy. Father has heart condition and cancer but still alive...affects my rate.

$62 per month on a 1M 20 year term - William Penn Insurance.


Wife - 30 Non Smoker and healthy

$28 per month on 800K 20 year team - William Penn Insurance
« Last Edit: February 12, 2015, 12:39:21 PM by jms493 »

JLee

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Re: Do you have life insurance? What do you pay for it?
« Reply #6 on: February 12, 2015, 12:36:38 PM »
The company gives me 1.5x my salary as part of my package.  I have never bought more.  After I retire I will not buy any either.  If I had not had any from work I probably would have bought a $200-$250k 10-15 year term policy when we had kids. My wife only works part time but she is well educated and has good earning potential if need be.  I have never had insurance on her.  At this point, we are self insured.

Same for me - 1.5x salary. I don't see any purpose in buying anything extra- I have no kids.

jms493

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Re: Do you have life insurance? What do you pay for it?
« Reply #7 on: February 12, 2015, 12:40:25 PM »
Yeah if you don't have a wife or kids i don't see the need for life insurance.  Maybe a small policy to cover funeral expenses.

savedough

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Re: Do you have life insurance? What do you pay for it?
« Reply #8 on: February 12, 2015, 12:40:47 PM »
We pay $678 a year (total, not each) for two $1M 20 year term policies.   Both in great health and between 30 and 35. 

We had $500K policies about 5 years ago for 30 year term, but when we upped the amounts we shortened the term because in 20 years our assets will be enough to self-insure.   Our biggest goal was to provide for our three children and make it possible for the surviving spouse to move and perhaps take a job that provides great work-life balance.

My employer also provides 1-3X my salary (depends on the cause of death), so this would be a nice bonus and we have the paperwork, but I'm not depending on it. 

MsPeacock

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Re: Do you have life insurance? What do you pay for it?
« Reply #9 on: February 12, 2015, 12:44:10 PM »
$77 per month on a 30-year 500K policy (term life). My rate when I purchased was extremely high because my father died when he was 36 from cancer. I was told that if both parents had lived to/past age 65 the rate would have been less than half as much.

Due to divorce settlement I have to carry life insurance for myself as a means of providing for the kids. I'll probably drop it before I reach the 30 year mark on it (which would be when I am 69) , but will likely carry it until they finish college.

minimustache1985

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Re: Do you have life insurance? What do you pay for it?
« Reply #10 on: February 12, 2015, 12:47:13 PM »
H and I each have a 250k 20 year term policy, $30/mo for mine, $38/mo for his.  They are pricier than many people here pay due to my family health history (deaths from cancer and heart disease... yay) and his chronic health condition.  We don't have kids yet but plan to, and H had been denied by other insurers- Farmers allowed him because he hasn't been hospitalized in the last 10 years for it, but if that changed he would be just about uninsurable (well, for term anyways) so we opted to get it while he could.

TN_Steve

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Re: Do you have life insurance? What do you pay for it?
« Reply #11 on: February 12, 2015, 12:54:17 PM »
So I get life insurance through work. I have a wife who is a SAHM and 2 kids. Although we are saving a lot of our income, it seems to make a lot of sense to me.

I pay $50.44 per year or $1.94 every other week. It covers one year of salary. This seems like a no brainer to me, because it would take just under 100 years of investing this amount of money (in today's dollars at 4%) to equal the value of the payout. I won't pay for it after I am FI. Right now though, it makes a lot of sense.

Do you have life insurance? If so, what do you pay for it and why do you keep it?

We had it on DW when we were in your shoes.  Is 1 year enough?  Seems pretty scant.  We had a lot more (5-8 years, I think, which was even more on a tax adjusted basis).  I'd run the numbers on it to get comfortable with the amount.  Don't remember what ours cost, but too old to be relevant and our income was likely different.  (It was a 20 year level premium term policy, which we dropped early)

jackiechiles2

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Re: Do you have life insurance? What do you pay for it?
« Reply #12 on: February 12, 2015, 01:18:18 PM »
$1m on me and $750k on my wife.  Pay $64.61 a month total.

La Bibliotecaria Feroz

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Re: Do you have life insurance? What do you pay for it?
« Reply #13 on: February 12, 2015, 01:43:25 PM »
1 year salary seems VERY scant! And it's through your work--what if you got sick and lost your job? Your family would be SOL.

Mr. FP has between six and seven years' salary in total life insurance--$350K on our own and $50K through work. Enough to let me and the kids live a normal middle-class lifestyle (house with a yard, karate lessons, that kind of thing) if, God forbid, something happened to him. We will probably reduce this amount when the kids are older, we have more savings, and I am working full-time--right now we have two preschoolers and no savings. The work coverage is free and the $350K is only two hundred a year.

On me, we have I think $100K and it costs $100/year (I'm asthmatic and had c-sections--maybe that's why I didn't get as good a rate?), plus a little through my work. Enough to help with the costs of extra child care and household services.

We also have to think in terms of what if something happened to BOTH of us? My sister would probably take in the kids, but she would need to buy a bigger house, which would be very pricey in the town where she and my parents live.

netskyblue

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Re: Do you have life insurance? What do you pay for it?
« Reply #14 on: February 12, 2015, 01:58:57 PM »
Not yet.  DH & I don't own a home yet, no kids, and we have enough assets to cover funeral costs.  Neither one of us would be in financial straits if one of us died, and we aren't likely to die soon.

We will get life insurance, probably for the amount and term of our mortgage, when we buy a house.

Or if we have kids.

Retire-Canada

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Re: Do you have life insurance? What do you pay for it?
« Reply #15 on: February 12, 2015, 06:17:41 PM »
No life insurance. All my investments go to my GF. She'd be FI with our combined assets today. She is supposed to look after my cat if I die and I have no kids.

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Gone Fishing

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Re: Do you have life insurance? What do you pay for it?
« Reply #16 on: February 13, 2015, 09:23:21 AM »
Don't take this the wrong way, but how would the insurance company know if your parents had cancer/heart attack/stroke, etc unless you told them?  I do not think they can look at their medical records.  My parents often do not inform me of their medical issues because they do not want me to worry.  Might be more of an issue when one of them passes or loses mental function, but for right now they can take good care of each other.  Is there any way an insurer could wiggle out of a claim because the insured was not aware of their parent's medical history? I guess they could use public record to determine if they died before 65 or whatever age and then inquire about cause of death...

MillenialMustache

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Re: Do you have life insurance? What do you pay for it?
« Reply #17 on: February 13, 2015, 09:31:17 AM »
My DH and I both have 1x our salary for free from our employer. We do not have anything additional, no kids, paid off home. Either could support our lifestyle without the other's salary. We will not have any when we FI.

DoNorth

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Re: Do you have life insurance? What do you pay for it?
« Reply #18 on: February 13, 2015, 09:39:06 AM »
I have a 30 year, $500K term policy for $74/month and my wife has a $22/month $250K 30 year policy.  I got it right before I deployed to Afghanistan...the rate was high because I didn't have time for a medical exam.  I had every intention of getting the medical exam when I got back so I could reduce the premium, but in the meantime, I was diagnosed with a chronic form of leukemia (in remission for over 3 years now), so I left the policy as is figuring I would be uninsurable or the rate would be through the roof if I had a "re-look".  I'll probably drop it once the stash is in the $1.5m to $2M range.

TN_Steve

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Re: Do you have life insurance? What do you pay for it?
« Reply #19 on: February 13, 2015, 09:45:28 AM »
Don't take this the wrong way, but how would the insurance company know if your parents had cancer/heart attack/stroke, etc unless you told them?  I do not think they can look at their medical records.  My parents often do not inform me of their medical issues because they do not want me to worry.  Might be more of an issue when one of them passes or loses mental function, but for right now they can take good care of each other. Is there any way an insurer could wiggle out of a claim because the insured was not aware of their parent's medical history? I guess they could use public record to determine if they died before 65 or whatever age and then inquire about cause of death...

Insurers will definitely seek to avoid paying if there is likely fraud in the application [EDIT: , and they do investigate, particularly on large claims] .  "Never Sky dive," "Not a diver," "Mom and Dad perfectly healthy" are all likely to bite you if false.  Some states only allow insurer to avoid coverage if you die from that particular risk; other states may go further.  Sure, if you are adopted, and never met your genetic parents, your survivors would have a strong position, but otherwise, it could be a battle for them.

Particularly given that, in most cases, it would affect rating/pricing rather than availability of coverage, it is taking a significant risk.  (And, you would be lying....)  In DW's case, since there is a real (but very small) risk of death from our hobbies, it wasn't worth it to omit them from application--otherwise, if we both died on vacation, our kids would have been up the creek without a a paddle.
« Last Edit: February 13, 2015, 09:47:17 AM by TN_Steve »

ZiziPB

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Re: Do you have life insurance? What do you pay for it?
« Reply #20 on: February 13, 2015, 10:05:53 AM »
I have a $500K term policy costing $200 per year.  It was a 20 year policy and I think I have a couple of years left on it.  I am not planning on getting a new one since my daughter will be finished with her education by then and I have no other obligations or needs that I would need the coverage for.  Work provides additional $25K at no cost to me.

davisgang90

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Re: Do you have life insurance? What do you pay for it?
« Reply #21 on: February 13, 2015, 11:13:52 AM »
I pay $26 a month for a $400,000 policy through work (SGLI) and $41 a month for a $1M policy good for 10 years through Navy Mutual Aide.  That gets me through my working years and into retirement and will provide for my wife and our youngest 2 kids, one of whom has autism and will need our support for life.


tracylayton

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Re: Do you have life insurance? What do you pay for it?
« Reply #22 on: February 13, 2015, 11:29:09 AM »
At age 45, I took out a 15 year term policy for $600,000. It cost me $45/month. I didn't renew it this past January (age 50), because I have enough assets that all 3 of my kids will be in great shape (2 are already over 21).

ninjaneer

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Re: Do you have life insurance? What do you pay for it?
« Reply #23 on: February 13, 2015, 11:43:47 AM »
I took out a $500k 20 year policy when my first was born so that if I died DW could pay off a house (and the debts we had at the time).  Since she's a SAHM now, that would make it possible for her to earn enough from a job to cover the rest.  That was 10x salary at the time.  I picked 20 years because I figured by that point we would be self-insured.  We're a little behind, but not so much that she won't be fine when the term expires.

mandy_2002

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Re: Do you have life insurance? What do you pay for it?
« Reply #24 on: February 13, 2015, 11:47:03 AM »
I automatically get 1X included, and added 0.5X for $0.43 per month because employees who buy coverage get a free will, living will, revocable trust, and power of attorney. 

FarmerPete

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Re: Do you have life insurance? What do you pay for it?
« Reply #25 on: February 13, 2015, 12:14:24 PM »
Work provides 2x salary for free.  I bought an additional $300k for me through work.  Cost is $208 per year.  Price isn't locked in though, so it will go up when I hit 35.  My plan is to get a 20yr plan soon.  When I got prices on term life a year ago, they were still putting me in a high risk category because I had lost 100lbs in the year before.  They don't factor the weight loss in until you've held it off for a bit.  I'm thinking that I should start looking again now that I've kept the weight off for a year.  We'll see.

Sid Hoffman

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Re: Do you have life insurance? What do you pay for it?
« Reply #26 on: February 13, 2015, 01:20:40 PM »
Based on this thread, I just canceled my life insurance policy.  I divorced last year and have quite a lot more in 401k/IRA savings than my life insurance was worth anyway.  I've read that the IRS provides the ability to stage payments from an inherited IRA so that it is spread out over the heir's full lifetime, thus avoiding taking a sudden massive 1-year tax hit as otherwise happens.  I guess at some point this year I'll have to write that up in a will to make sure they know to do that instead of taking a cash payout and paying a ridiculous amount of tax.

Anyway, I was paying an extra $4.56/paycheck, so $118.56/year for insurance I can never personally use and which was half what my retirement savings is worth.  Not to mention there's a certain point at which I'm content to say that enough money is enough for something that is statistically unlikely to happen while I'm an employee anyway.  Would my family members really be that much happier with $300k instead of $220k?

I'd rather have that $1000 every 10 years going towards my own finances given how young I am and my lack of a spouse or young children.  That and I'm honestly just going to stay on the side of saying that the odds of me suddenly dropping dead in my 30's and 40's are not likely.  I'm not planning on still working there in my 50's.

MustachianAccountant

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Re: Do you have life insurance? What do you pay for it?
« Reply #27 on: February 13, 2015, 02:03:15 PM »
$275/year for my wife and myself. I have a $750,000 policy and she has a $200,000 policy.
(I forget what the split is in cost between the two policies, as I just lump them together on my budget spreadsheet)

Gone Fishing

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Re: Do you have life insurance? What do you pay for it?
« Reply #28 on: February 13, 2015, 02:05:18 PM »
Based on this thread, I just canceled my life insurance policy. 

Awesome.

minimustache1985

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Re: Do you have life insurance? What do you pay for it?
« Reply #29 on: February 13, 2015, 03:07:14 PM »
Don't take this the wrong way, but how would the insurance company know if your parents had cancer/heart attack/stroke, etc unless you told them?  I do not think they can look at their medical records.  My parents often do not inform me of their medical issues because they do not want me to worry.  Might be more of an issue when one of them passes or loses mental function, but for right now they can take good care of each other.  Is there any way an insurer could wiggle out of a claim because the insured was not aware of their parent's medical history? I guess they could use public record to determine if they died before 65 or whatever age and then inquire about cause of death...
They ask specific enough questions that it isn't a matter of not telling them, you'd have to outright lie.  For example they ask if your parents are still living, if so what health issues do they have and medications they take, if not what age they died and cause of death.  And like a PP said they investigate claims in the case that you do pass away.  Some states there is a period of due diligence so after X years it doesn't matter if you lied or not, but if they find anything during that time they'll cancel your coverage and if they don't find out it would still be a moral grey area.

Acg

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Re: Do you have life insurance? What do you pay for it?
« Reply #30 on: February 14, 2015, 03:02:06 PM »
I posed this question in the thread that I created below but I figured Id ask it here too.  I'm 31 years old, I have twins on the way, and also unfortunately have brain cancer.  I have the standard 1x life insurance policy through my work but thats peanuts.  I tried to increase that but Prudential requires some medical paperwork to be completed before increasing the rate and I would obviously fail that.  So I'm curious, are there any other options available to me or has that ship sailed?  Thanks.

http://forum.mrmoneymustache.com/ask-a-mustachian/reader-case-study-twins-on-the-way-i-have-brain-cancer-want-to-buy-a-house/