Should I buy life insurance?

[Guide2003]

Long story short, I am planning on buying term life insurance for myself but my wife doesn't want to. A full case study is forthcoming, but we have about $300k in non-tax advantaged investments, $115k in tax sheltered investments, about $15k in the bank, living expenses <$45k, and the only debt is $55k on our mortgage. I'm 30, wife is 27 and currently stays at home; no (permenant) kids and none planned at this point. I'm in the military, and pay for $200k of SGLI coverage ($15/mo) that will expire when I separate, so I was planning on cancelling that and picking up a bigger policy that I could take with me afterwards. My wife says she would go back to work if I died and certainly she could get by for a while on what we have. Thoughts?

Typing this made me realize a crucial detail, that I am currently leaning towards staying in the military for 12 more years to get the pension (and could therefore keep the SGLI), at which point we would FIRE.

[Cossack]

It should be something you both agree on. Is your wife not able to work or self-employed or is she RE?

It looks like you are in a good financial position. I personally wouldn't bother with life insurance.

[Guide2003]

At her age she would likely be able to get a job and probably remarry eventually, right?  But some lingering questions - what is no permanent kids?  Why does your wife not work now?

Yeah, she'd have no problem remarrying--she's great!

We are foster parents now, and the longer we do that, the less inclined we are to have bio kids. So she was a teacher but is staying home with the young ones we have now. I've started to consider her working a small part-time job to have 401k contribution potential, but for the next year or so we don't plan for her to work.

[Guide2003]

Is your wife not able to work or self-employed or is she RE?

She has her teaching certificate and could bring some income in that way, but when she did teach it was more of a time commitment and strain on us both than it was worth. If she went back to work it would probably be somewhere <$50k and I don't know if that's worth it for us currently.

[jlcnuke]

The purpose of life insurance is to provide for your dependents until they can take care of themselves. With $400k+ of available money, and <$45k/year in expenses, your wife would need to find a job or another man to support her within ~9 years. That seems quite reasonably achievable. As such, it doesn't look like you have any need for life insurance.

[ROF Expat]

I don't disagree with any of the previous comments to the effect that you don't have to have life insurance.  That said, If I were in your shoes, I'd keep the current SGLI while in the military and I'd buy a small term policy before leaving the military, at least enough to pay off the mortgage.  For the cost of a couple of cups of coffee, you could leave your wife in a position to pay off the mortgage and be in a more comfortable financial position.  Once the mortgage is paid off (and as your net worth presumably grows), I would feel even less of a need to have life insurance unless your circumstances change. 

[RetiredAt63]

She may not want to go back to work, she may want to do other things - like continuing fostering, or other activities she prefers that are socially useful but not paid.  This is an early ER site, right?  And she may not want to find another man to support her.  My aunt was widowed young and she never found another man she wanted to marry, and knowing her I am sure she had offers.

BTW, "find another man to support her" is an incredibly sexist viewpoint.

[respond2u]

Long story short, I am planning on buying term life insurance for myself but my wife doesn't want to. A full case study is forthcoming, but we have about $300k in non-tax advantaged investments, $115k in tax sheltered investments, about $15k in the bank, living expenses <$45k, and the only debt is $55k on our mortgage. I'm 30, wife is 27 and currently stays at home; no (permenant) kids and none planned at this point. I'm in the military, and pay for $200k of SGLI coverage ($15/mo) that will expire when I separate, so I was planning on cancelling that and picking up a bigger policy that I could take with me afterwards. My wife says she would go back to work if I died and certainly she could get by for a while on what we have. Thoughts?

Typing this made me realize a crucial detail, that I am currently leaning towards staying in the military for 12 more years to get the pension (and could therefore keep the SGLI), at which point we would FIRE.

I'd counsel you to have at least enough money to cover funeral expenses and lost income until she can find a job (imagine if you'd died in 2008--jobs weren't plentiful).

Also, I would consider the increased expenses that come from all parents working (even if "all" is one). Child care, home care, nurse, cook, maid, financial manager, travel planner, etc. The economic value of a stay-at-home parent is pretty high, and if the remaining spouse goes back to work, you'll have to replace a good portion of that by paying someone else to do it to maintain the same level of comfort and workload.

I'm really advising you to have life insurance for both you and your wife. It doesn't have to be a lot, and it probably won't be very expensive while you're young. As you save more, you can decide whether or not to keep it going.

[Guide2003]

Also, I would consider the increased expenses that come from all parents working (even if "all" is one). Child care, home care, nurse, cook, maid, financial manager, travel planner, etc. The economic value of a stay-at-home parent is pretty high, and if the remaining spouse goes back to work, you'll have to replace a good portion of that by paying someone else to do it to maintain the same level of comfort and workload.

I'm really advising you to have life insurance for both you and your wife. It doesn't have to be a lot, and it probably won't be very expensive while you're young. As you save more, you can decide whether or not to keep it going.

Yeah, but we have plenty to cover a funeral and pay the mortgage now, along with many years of living expenses for her. The kid situation is short term, so she wouldn't have that burden more than a year or so. Same thing if she died, I would probably have to turn the kids back over to the state. Our license is predicated on there being two of us.

[respond2u]

Thanks Guide--I didn't understand fostering would end if one of you do :)

If your wife is confident she can get the job, then I wouldn't buy any unless something changes (buy a mortgage, etc.). As you said, you've got enough to cover the immediate troubles.

[Nords]

Long story short, I am planning on buying term life insurance for myself but my wife doesn't want to. A full case study is forthcoming, but we have about $300k in non-tax advantaged investments, $115k in tax sheltered investments, about $15k in the bank, living expenses <$45k, and the only debt is $55k on our mortgage. I'm 30, wife is 27 and currently stays at home; no (permenant) kids and none planned at this point. I'm in the military, and pay for $200k of SGLI coverage ($15/mo) that will expire when I separate, so I was planning on cancelling that and picking up a bigger policy that I could take with me afterwards. My wife says she would go back to work if I died and certainly she could get by for a while on what we have. Thoughts?

Typing this made me realize a crucial detail, that I am currently leaning towards staying in the military for 12 more years to get the pension (and could therefore keep the SGLI), at which point we would FIRE.

It sounds as if you feel that you're able to self-insure and your spouse thinks that you don't need life insurance.  If she's willing to face a survivor's life without a lump sum in the bank then you're both probably right.

It's a good idea to keep SGLI (for now) because of its guaranteed insurability and its conversion to VGLI.  No matter what happens to you in the military, you'll always be able to buy VGLI when you separate (even if you're medically/physically discharged).  It's worth the $15/month to maintain your cheap insurability, and it might even be worth the money to boost your SGLI to $400K.

My spouse and I kept our SGLI policies while we were in uniform, but we let them terminate when we retired.  We also felt that we had enough assets for our survivor, so we opted out of the Survivor Benefit Plan too.

If you someday decide that you really do want life insurance, then buy your cheap term before you start your separation/retirement physical.  You want the insurer to issue the policy before your military medical exam uncovers any potential problems, and absolutely before you begin your VA disability screening.  You don't want the insurer to have any excuses to seek medical underwriting or to even decide that you're uninsurable.

[dogboyslim]

Financially you may have enough to not need insurance.  I will say that the death of a spouse will be a difficult time in the survivor's life.  Funeral arrangement and costs, dealing with the transfer of assets/probate, general emotional stress etc. may mean that while you or your spouse are capable of moving on from a strictly financial, physical and skillset perspective, you might not be ready to move on emotionally for some time. 

When Mrs. DBS and I talk life insurance, we discuss it taking one year to get her from SAHM to working with meaningful salary.  Our goal is to not impede our other financial goals to support this year, so we purchased slightly more than one year of my salary in term.  I have other insurance as a part of work, but we keep this as the portable mitigation to my early demise.  She has an equivalent amount on her to cover the additional costs I will see if she passes due to additional child-care and potential transportation needs, as well as time for me to take a short leave of absence from work.

Do what is right for you, but don't forget that the surviving spouse is going to be a total mess, and you should include that period of time into your plans.

[Guide2003]

It's a good idea to keep SGLI (for now) because of its guaranteed insurability and its conversion to VGLI.  No matter what happens to you in the military, you'll always be able to buy VGLI when you separate (even if you're medically/physically discharged).

Good tip with the conversion, I hadn't thought about that. I've heard there's only a couple companies that would pick me up as a military pilot anyway.

Do what is right for you, but don't forget that the surviving spouse is going to be a total mess, and you should include that period of time into your plans.

Yeah, good point. I'm trying to get my wife involved enough with our finances that it would be easy for her to pick up when I shuffle off this mortal coil.