Life insurance for 30-yr old, dual income, no kids?

[BuckyBadger]

I had been thinking about this for a while, but seeing another thread about life insurance made me decided to finally ask about it.

I'm wondering about the necessity for my husband and myself to have term life insurance. We have no children. We both work and make ballpark the same amount of money (within $25k of each other). I knew that my job offered some, but I didn't know how much so I just looked it up and it's only $10k. I believe that his company also offers some, but I don't know how much. I can't imagine it would be more than his salary, so only about $100k max and maybe less.

We do have a mortgage on our house of about $340,000 with a monthly payment of about $2,000. If one of us were to perish I would image that it would be nice to be able to pay off the house.

But is it really necessary? An instant MetLife quote says that for less than $30 per person per month we could both get $400,000, 20 year policies.

Should we do this? Does it make sense? I always thought that if you didn't have kids and weren't dependent on your spouse's salary that you didn't really need life insurance, but now I'm second guessing myself.

Thoughts? Opinions?

[NYBoglehead]

I would say you need it. If one of you were to have an untimely death, would the survivor not experience some sort of hardship from the loss of the 2nd income? It only gets more expensive to purchase life insurance as you get older, so if you think that you'd ever need it the time to get it is when you are younger.

That said, I guess it largely depends on whether or not you plan on having children. If you don't, and all the monthly expenses can be covered by one income, you might not need it.

[bertie wooster]

If you don't have any plans for kids then I would not bother unless both of you decide you would need more money if the other died (which seems unlikely in your case).

If you do plan to have kids then I would purchase now. For one thing it's easier logistics wise to get it now rather than to add to the list of things you want to do once the pregnancy starts. Also, if you have difficult time getting pregnant the medical workup may reveal a condition that increases your insurance rates.

Whether or not you have kids, you should strongly consider getting disability insurance.

[livesoft]

When we were in your situation, we did not have any life insurance except what our employers provided. Then when we had kids, we never got any life insurance because we were self-insured.

[ShowMeTheER]

Just a matter of preference. Have the talk. I'd be in the court of having something to take the burden off of the mortgage, etc... especially if you can afford the policy easily. Most fixed costs remain when the household goes from 2 incomes to 1.

[Toons]

Like others My wife and I did not purchase life insurance while we were both working until we had children,I would hold off if I was in your position

[NYBoglehead]

Like others My wife and I did not purchase life insurance while we were both working until we had children,I would hold off if I was in your position

Just keep in mind that policies get more expensive as you age. If your blood pressure goes up a bit, your cholesterol, your weight, etc you can expect to pay more. Being a healthy person in my late 20s I don't particularly enjoy paying the monthly premiums but know that if I waited a few years chances are my premiums would be higher. Just something to think about.

[mephistophles]

I would recommend enough life insurance to pay off the mortgage, other debt, and for last expenses. If healthy, the coverage is very inexpensive. Of course, neither of you wants to die young, but it does happen sometimes. Life insurance would make life easier for the survivor with one income.
ole meph
life insurance agent

[livesoft]

Can one save some money by paying annually instead of monthly?

[MN Finance]

You do NOT buy insurance when you're young just because it will be more expensive when you age. You buy insurance to protect against an existing risk of loss. The cost analysis is the same whenever you purchase it. If your chances of dying are 1% between ages 20 and 30 and 5% between ages 30 and 60 (no idea the numbers), then someone buying insurance from 20 to 60 only pays the additional relative premium reflected in their chance of dying between 20 and 30 (which is almost zero ) versus the person buying the policy from 30 to 60. The all in cost are virtually identical for someone insuring from 20 to 60 vs 30 to 60, again because the risk of death is low in the extra 10 yrs.

That said, since you stated you'd like to have the house pd off, and 400k of insurance is so cheap, then it makes some sense. It's not that the survivor couldn't get by on their own, but if this made it that much easier, I like the idea.

[G-Money]

Can one save some money by paying annually instead of monthly?

Depends on the insurer, but typically, yes. Not a ton, but usually more than you could earn in a MM or short-term bond fund.

[Watty]

An instant MetLife quote says that for less than $30 per person per month we could both get $400,000, 20 year policies.

Should we do this? Does it make sense? I

Yes. You are in a situation where you can afford a house that likely cost somewhere around $400k so that should have almost no impact on your budget.

The problem with thinking that the surviving spouse will be able to afford the house on one income is that they may also have large hospital bills from a long illness to deal with or they could have also been injured in a major car accident.

Disability insurance would also be worth looking at but it will likely be more expensive since it is much more likely

[rr2]

Can one save some money by paying annually instead of monthly?

Depends on the insurer, but typically, yes. Not a ton, but usually more than you could earn in a MM or short-term bond fund.

Ask and ye shall receive:
http://www.bogleheads.org/forum/viewtopic.php?f=2&t=94578

[Grt2bOutdoors]

I would recommend enough life insurance to pay off the mortgage, other debt, and for last expenses. If healthy, the coverage is very inexpensive. Of course, neither of you wants to die young, but it does happen sometimes. Life insurance would make life easier for the survivor with one income.
ole meph
life insurance agent

+1000 - Sound advice.

[Grt2bOutdoors]

Like others My wife and I did not purchase life insurance while we were both working until we had children,I would hold off if I was in your position

Can BuckyBadger come to you for the mortgage money if their spouse dies?
Weigh the cost - say it's $200 per person or $400 a year vs. the weight of $340,000?
This is no time to be penny wise and pound foolish.

[rr2]

I would recommend enough life insurance to pay off the mortgage, other debt, and for last expenses. If healthy, the coverage is very inexpensive. Of course, neither of you wants to die young, but it does happen sometimes. Life insurance would make life easier for the survivor with one income.
ole meph
life insurance agent

+1000 - Sound advice.

We are in a similar situation, dual income no kids, and approaching the mid 40s. There is life insurance that will pay off the mortgage if necessary + little extra. While we live within the lower of the two incomes, it would be a tight budget. In such a situation, it would be difficult for the remaining spouse to be saving much. However, not having the mortgage would make it a lot easier and the remaining spouse should be able to fully fund a 401k and an IRA. Our term life policies end by about the time we hope to have our mortgage paid off.