Author Topic: Life insurance - Advice needed  (Read 2422 times)

Gizsuat2

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Life insurance - Advice needed
« on: January 27, 2016, 03:54:14 PM »
My husband and I are hopeful for early retirement, but we're on a much longer track than the majority of you reading this.  In brief, we have about $250K in assets but owe the same amount on our mortgage.  We are in our mid-30s, two kids.

The question is this: Should we decrease my husband's life insurance coverage from $500K/year to $250K/year?  This would yield a $400 per year savings. 

And beyond that, perhaps the real question is this: What questions should we be asking ourselves to help make this decision?

Thanks everyone, really appreciate any thoughts.

Gin1984

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Re: Life insurance - Advice needed
« Reply #1 on: January 27, 2016, 04:28:02 PM »
How income do you each pull in?  How much money would your children get from social security if you/him were to pass?  Also, do you mean that you have $250,000 in investable assets or that your home is worth as much as your mortgage?

Ricksun

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Re: Life insurance - Advice needed
« Reply #2 on: January 27, 2016, 04:48:17 PM »
You really didn't provide enough information to make an assessment.  The main reason to have life insurance is to cover lost income during your earning years.  It's something to have in place until you have enough other assets to make it OBE.  The question really is, can you maintain the lifestyle you want/need to with $250,000 vs the $500,000?  What are your monthly expenses?  What other benefits will you get (SS? Other work benefits?, etc...) Maybe you don't even need the $250k...  Also, you mentioned just your husband's.  Recommend you take a look at your own life insurance needs as well - taking care of 2 kids will be hard and come with significant expense for whomever is the surviving spouse. 

Personally, you're talking $33/month; I'd keep the thing for piece of mind until you really retire, or it's term is up.  Good luck!

Ricksun

Gizsuat2

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Re: Life insurance - Advice needed
« Reply #3 on: January 27, 2016, 04:51:28 PM »
Thanks for the thoughts.

We have $250K in assets (IRAs, bank accounts, etc.).  We owe $250K on our house. 

Our incomes are wildly uncertain ... my husband makes $125K/year in a volatile industry.  He may lose his job at some point in the near future.  He previously made $40K/year.  Realistically, if he lost is job, he could probably make $70K/year.

I previously made $80K/year, but currently make $30K/year.  I could go back to an $80K/year job if needed.


Saving in Austin

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Re: Life insurance - Advice needed
« Reply #4 on: January 27, 2016, 08:24:48 PM »
If it were me I wouldn't try to save the $400 per year.

It seems like you will need the $500K if something happened to him.

Life insurance is a need if you have 2 kids, unless you can afford to self insure.


Urchina

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Re: Life insurance - Advice needed
« Reply #5 on: January 27, 2016, 08:57:21 PM »
When we were shopping for life insurance for my husband, we chose an amount that, combined with my salary, would allow the kids and I to stay in our home until the kids were done with college.

That was all I needed to feel financially secure enough. We are currently taking out a policy on me that will pay for an after-school housekeeper/nanny for the kids with a bit left over for college.

Both policies are term life and will expire when our youngest graduates from college.

I figure the last thing our family needs is to have to move due to money if either DH or I die, so our life insurance policies reflect that.

MrsPete

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Re: Life insurance - Advice needed
« Reply #6 on: January 27, 2016, 09:17:49 PM »
The important question:  If your husband were to die, how much would you need to take care of yourself and your children?  This takes into consideration how much you earn, how much you'd need to continue your (revised) goals for retirement and the kids' education.  Think, too, about whether you'd need to hire help for the tasks that you're now able to complete because there are two of you.

Then the same question for him:  If you were to die, how much would he need?

If both of you were to die, what would the kids' caregiver need? 

And then think about disability insurance.  The nightmare scenerio isn't a parent dying:  It's a disabled parent living.  Imagine one of you is injured badly and needs expensive medical care, perhaps even nursing home or rehab care for a time.  That parent isn't earning, isn't helping with the household work and child care ... BUT is generating expensive medical bills ... AND life insurance isn't kicking in.  And this situation is more common than a young parent dying.

Gizsuat2

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Re: Life insurance - Advice needed
« Reply #7 on: January 27, 2016, 10:11:34 PM »
All good thoughts, thank you!