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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Flyingstache on June 28, 2020, 06:46:31 PM

Title: Life Insurance
Post by: Flyingstache on June 28, 2020, 06:46:31 PM
Hello Everyone,

My wife & I are 29 years old, both teachers, & have 2 kids under two. We have no debt other than our house (purchased 2yrs ago for $170k & currently valued at $180k - have $100k left & just refinanced to 15yrs at 2.75%), have $100k in investments & about $50k in savings.

About 2 months ago (right before our 2nd was born) we went through the process of getting quotes for Life Insurance. We went through our independent insurance agent & because of COVID, our health screenings were over the phone. We received quotes for $300k in coverage for each of us for 25yrs.

My initial quote was $308/yr & then changed to $493. My wife's initial quote was $189/yr & then came back at $898. My wife has a chronic disease listed in her medical chart due to a genetic mutation but she doesn't have any issues from it & is not on any medicine. We both are healthy people & former college athletes. We were very frustrated by the pricing.

We each get about $40k in life insurance built in from our jobs.

Any advice on how to proceed?
Title: Re: Life Insurance
Post by: secondcor521 on June 28, 2020, 07:02:49 PM
Get more quotes.

When I did life insurance, I think I went through SelectQuote, but there are several online places that will do essentially the same thing nowadays.

Usually the quotes they give are assuming a certain very good health level.  You're wife's situation probably will result in an increasing quote after they do the underwriting, but the amount of the increase may differ from company to company.  A few of the things under your control that increase premiums are smoking status and obesity, so quit smoking and lose weight if either of those apply.

If you want to reduce the cost, you could look into either (a) 20 year policies, and/or (b) decreasing face value policies, because in 20 years - assuming you don't have more kids over the next few years - you'll very likely be self insured.  You could also look at $250K policies instead of $300K - I think there is a significant pricing breakpoint at $250K at some insurers.
Title: Re: Life Insurance
Post by: JoJo on June 29, 2020, 07:21:59 AM
I'd second some of second's comments - 20-year term would be fine, by that time your kids would be in college/adults, and more companies offer 20-year term so rates may be more competitive.

As for the rates vs 250 vs 300K, because almost all policies have a fixed policy fee, if you calculate the rate per 1000 the 300K will be a little cheaper per 1000 than the 250k, but it will be more expensive  (if you were contemplating 200K vs 250, I would have definitely recommended the 250, due to the rate banding). 

Title: Re: Life Insurance
Post by: socaso on June 30, 2020, 11:41:52 AM
That sounds crazy. My husband and I pay a little over $100 per month for BOTH of our policies, which have $650k coverage for 20 years. Maybe look at 20 year policies? We got our insurance in our 30's and I have a genetic disorder but it was newly diagnosed at the time and I'm not sure it was in my medical records when they quoted us.
Title: Re: Life Insurance
Post by: Hvillian on June 30, 2020, 11:46:20 AM
Definitely get more quotes.  My wife has some up and down episodes in her health history but nothing major, and we finally got what I consider fair rates from the third company I contacted.  The others were about 2x and 4x higher.  Different companies have different underwriting methods, and sometimes just make the insurance expensive if they are unsure how to value the risk for a condition.

Also, don't forget to account for social security survivor benefits that your family would be entitled to.  I think a lot of people ignore those and buy more insurance than they need.