get life insurance through work or independently

[wsisson]

We are brand new Mustachians trying to turn things around after years of bad choices. I've been devouring the blog. My specific question at this moment is about life insurance, since we are in our annual period of open enrollment for benefits through DH's work. We have a negative net worth (mostly due to $100k in student loans), that would be a positive 50k net worth (401ks and equity) if student loans were not present. Hope to have them forgiven via Public Service Loan Forgiveness within 5 years, and also to have amassed a lot more savings by then.

Husband is in law enforcement. We are both about 40 and have 5 kids. I work PT and am a SaHM. We currently have term life insurance both through his job and through an independent agent. Which should I cancel, which should I keep, if any? and how much should I keep? I had purchased both originally to get to the 5-7x annual salary figure I heard somewhere, but I understand now that idea is very un-MMM. The insurance is cheaper through his work, but if he were to lose his job for some reason (say an injury and subsequent disability), it would then be much more expensive to get independent insurance (he'd be older and also have a health condition). I think I understand MMM's view on life insurance. Once we have 6 figures in the bank it will be different, but for now it seems like a good purchase, although Mustachians may be able to provide a point of view I don't yet have.

[iluvzbeach]

If you are in debt, have 5 kids and are a SAHP, I would keep both, precisely for the reason you mentioned. Once you are on more solid footing and have a healthier nest egg, I'd look to pull back on one of the plans. Keep in mind that if your SO died your children would get social security, which would help significantly with expenses. Do you have insurance on yourself? Many people fail to factor that in for the SAHP and it's important because what you do is worth something and would cost your spouse dearly if you were to pass away.

I'm not an expert, but that's my two cents.

[Need2Save]

If your hubby is in law enforcement, I presume that his job prospects are pretty stable.  If he were to be injured and/or disabled seems to be your biggest concern. What you want to find out from the HR/Personnel dept is if he were to become injured/disabled and lost his employment, could the life insurance he has through the job be 'converted' or 'ported' to an individual policy? In fact, many group policies are written in such as way that if you are totally disabled, the employer gets a premium waiver and the coverage continues through a disability but for no premiums. If that is not the case, your hubby would likely pay the insurer's rate at the time he converts his policy to an individual one, but they won't ask any health questions. Coverage could be gauranteed since it originated under the group policy.  I highly recommend you ask about this if it's your primary concern or maybe you can find the answers on a web site or materials they provided to your hubby?

Considering your debt, I think life insurance is very important for you right now, but you can reasses in a few years and possibly drop the private insurance assuming your husband still is working in law enforcement.

I also second that insuring yourself as a stay at home parent is equally important and often over-looked, especially with 5 kids.  If you were to pass, what would your husband do for day care options (assuming your 5 kids are not all teenagers)?   Term Life insurance would probably be very cheap for you or can you buy spouse life through his job?  It wasn't clear if you have coverage on YOU?

[wsisson]

If you are in debt, have 5 kids and are a SAHP, I would keep both, precisely for the reason you mentioned. ...Do you have insurance on yourself? Many people fail to factor that in for the SAHP and it's important because what you do is worth something and would cost your spouse dearly if you were to pass away.

I apologize for taking awhile to get back to this. Thank you for taking the time to reply. The majority of the debt would not be an issue if hubby passed away, since 95% of it is his student loans. Yes, we do have a good amount of life insurance on me as well.

[wsisson]

If your hubby is in law enforcement, I presume that his job prospects are pretty stable.

Firstly, thank you for taking the time to reply. Stable? Yes and no. It's doubtful there would be layoffs, but being fired is always a possibility. Have seen really good cops fired even when they handle situations completely according to policy but the agency wanted a scapegoat. We do have unions to help in these situations, but we also take into account that we are in the 2nd highest violent crime city in the US with a lot of anti-LE sentiment. .

What you want to find out from the HR/Personnel dept is if he were to become injured/disabled and lost his employment, could the life insurance he has through the job be 'converted' or 'ported' to an individual policy? In fact, many group policies are written in such as way that if you are totally disabled, the employer gets a premium waiver and the coverage continues through a disability but for no premiums. If that is not the case, your hubby would likely pay the insurer's rate at the time he converts his policy to an individual one, but they won't ask any health questions. Coverage could be gauranteed since it originated under the group policy.  I highly recommend you ask about this if it's your primary concern or maybe you can find the answers on a web site or materials they provided to your hubby?

Great idea. I feel foolish to admit this had never crossed my mind. I will definitely research.

It wasn't clear if you have coverage on YOU?

Very valid point to bring up. We do have a good amount of life insurance on me, intended to cover child care costs among other things. We have 2 policies on me as well, one through the employer and one independently.

[chasesfish]

I think you're smart to carry the life insurance right now, provided they are all term policies.

How much insurance can you buy through his work and and what's the difference between employer provided life insurance vs. term?

In our case, I used to have both term and work provided insurance, then went to work only, now have trimmed back the amount to just what they provide.  The idea about portability is an important question to ask.