Term Life Insurance - what age to buy?

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cmoneymillz
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Joined: Thu Mar 02, 2017 8:07 am

Term Life Insurance - what age to buy?

Post by cmoneymillz » Fri Jul 07, 2017 8:09 pm

Curious to hear opinions on those who have been through this already.
Im 28, recently married, no kids.
Income $165k/yr.
Wife makes $105k/yr.

Only debt for us is our house mortgage (1445/month)
Cars paid off. College paid off. Etc etc.
401k maxed out for each of us yearly.
Backdoor roth maxed out for me yearly.
$100k in taxable account.
$28k emergency savings account.

I think currently, we are very fortunate being financially stable. I think we could be fine independently, worst case scenario. However, for when we have kids (2 or 3 starting in a few years), it makes more sense to have at least some insurance (I think).

Best premiums are now (<30 years old) for term life.
Planning to do 30 year, $1-1.5m and found quotes on term4sale for around $550/yr.

Should I go for it now, planning ahead for future family... or invest this $$$ instead in low cost index funds

Outafter20
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Location: New York for now.

Re: Term Life Insurance - what age to buy?

Post by Outafter20 » Fri Jul 07, 2017 8:14 pm

The younger you are when you get the policy, the cheaper the rate. I got a $1,250,000 20 year term for $1053 a year just over 4 years ago (at 40 years old) so the price you are quoting sounds reasonable. You can always cancel down the road if your situation changes.

Stay away from whole life.

Nate79
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Location: Portland, OR

Re: Term Life Insurance - what age to buy?

Post by Nate79 » Fri Jul 07, 2017 8:15 pm

I would get it soon and lock in those low rates.

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Taylor Larimore
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Invest the premiums saved

Post by Taylor Larimore » Fri Jul 07, 2017 8:27 pm

cmoneymillz:

In my opinion, it is usually a mistake to buy insurance you don't need. Instead, invest the premiums saved for your retirement or other goals.

Best wishes.
Taylor (a former life insurance salesman)
"Simplicity is the master key to financial success." -- Jack Bogle

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cchrissyy
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Re: Term Life Insurance - what age to buy?

Post by cchrissyy » Fri Jul 07, 2017 8:38 pm

that's a good price, lock it in now
nobody knows when they might get diagnosed with something that makes them uninsurable, or unable to get the good pricing. don't gamble with this to save just a few dollars.

Minty
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Location: NorCal

Re: Term Life Insurance - what age to buy?

Post by Minty » Fri Jul 07, 2017 8:41 pm

Mr. Larimore's post makes me think I may be wrong, because he knows a lot.

But: 20 some years ago, I was in your position, and I bought term life insurance. I never regretted it, and wish I had purchased more; I failed to account for my income increasing. When I wanted more, I had small health issues that made it costly. Given your incomes, I would say that each (potential) parent should have insurance in the range of 10 times what you think your income will be in 5 years--something like that. If you plans to have children change, reduce your insurance program. But getting insurance while you can get it is worth something. If you, and your parents on both sides, were distinctively healthy, that might change the calculus, and make waiting more reasonable.
Core Four with nominal bonds and TIPS.

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welderwannabe
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Re: Term Life Insurance - what age to buy?

Post by welderwannabe » Fri Jul 07, 2017 9:00 pm

Get it when you need it. Once you have kids it is probably a good idea.

I started with a 30 year term in my mid twenties. When I turned 40 I bought a new 25 year term and cancelled the 30. That will get me until I am 65 and my retirement savings becomes my wife's life insurance policy.

Of course people will me I wasted money starting with a 30 year term to not ride it out to the end. A 30 year term costs a lot more than had I just done a 20 year in my twenties and then done a 30 year when I turned 40 but the problem is you may become uninsurable at some point. You never know.

However, don't buy it unless you need it.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

Hypersion
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Re: Term Life Insurance - what age to buy?

Post by Hypersion » Sat Jul 08, 2017 1:41 am

I didn't buy any life insurance until my first borns second trimester.

I have extended family members with fairly large families and they don't have a dime of life insurance I don't understand why I should have spent thousands a year on life insurance when I didn't have any children or other dependents.

itstoomuch
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Re: Term Life Insurance - what age to buy?

Post by itstoomuch » Sat Jul 08, 2017 2:57 am

Do you own a motorcycle or intend to buy one in the near future? Scuba? Or mountain climbing with grapons and ropes?
Do you smoke or use products that contain nicotine?
Are either wife or you are excellent to proportional height/weight?
Are you or wife on any type of prescription drugs or have been prescribed but not taken?
Are you in the military active or reserves or intend to join?
Do you have moving vehicle violations in your past?
Are your parents still living?
How's your credit score?

My son's LI is expiring shortly. Some questions ( approximate) that I am discovering. I own his policy.
Ymmv
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

leverage
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Re: Term Life Insurance - what age to buy?

Post by leverage » Sat Jul 08, 2017 3:30 am

In my experience the sooner you buy life insurance. The better.

@itstoomuch

those questions. the motorcycle one actually made me smile. i sometimes feel that these insurance companies are actually asking you some other companies sales questions. lol.

Uniballer
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Re: Term Life Insurance - what age to buy?

Post by Uniballer » Sat Jul 08, 2017 4:27 am

leverage wrote:the motorcycle one actually made me smile. i sometimes feel that these insurance companies are actually asking you some other companies sales questions.
I think that one is pertinent to life insurance. The lady I know who harvests transplantable tissues from corpses calls them "donor-cycles".

fundseeker
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Re: Term Life Insurance - what age to buy?

Post by fundseeker » Sat Jul 08, 2017 4:44 am

Hypersion wrote:I didn't buy any life insurance until my first borns second trimester.

I have extended family members with fairly large families and they don't have a dime of life insurance I don't understand why I should have spent thousands a year on life insurance when I didn't have any children or other dependents.
I'd say your extended family members are playing a very risky and likely tragic game. Their decision-making would not be my go-by.

And, the OP is not talking about spending "thousands a year." He said approximately $500/year, and he and his wife make $270,000/year. It would be pocket change for him, and he ought to buy it.
Last edited by fundseeker on Sat Jul 08, 2017 8:19 am, edited 1 time in total.

basspond
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Re: Term Life Insurance - what age to buy?

Post by basspond » Sat Jul 08, 2017 6:45 am

It's not about age but if someone else is dependent on your money. When we got married we had enough insurance to pay off our mortgage 200%. When kids came we maxed out our employer sponsored insurance. Our mistake was not getting term outside of our employer but everything worked out fine and we didn't have to use.

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Cosmo
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Re: Term Life Insurance - what age to buy?

Post by Cosmo » Sat Jul 08, 2017 7:40 am

cmoneymillz wrote:Curious to hear opinions on those who have been through this already.
Im 28, recently married, no kids.
Income $165k/yr.
Wife makes $105k/yr.

Only debt for us is our house mortgage (1445/month)
Cars paid off. College paid off. Etc etc.
401k maxed out for each of us yearly.
Backdoor roth maxed out for me yearly.
$100k in taxable account.
$28k emergency savings account.

I think currently, we are very fortunate being financially stable. I think we could be fine independently, worst case scenario. However, for when we have kids (2 or 3 starting in a few years), it makes more sense to have at least some insurance (I think).

Best premiums are now (<30 years old) for term life.
Planning to do 30 year, $1-1.5m and found quotes on term4sale for around $550/yr.

Should I go for it now, planning ahead for future family... or invest this $$$ instead in low cost index funds
(Edited to include laddering)

I echo what others have said. Don't by life insurance unless you need it AND only cover the time when you need it. Instead of getting a 30 year policy and locking low rates now, wait until you eventually have kids and then just get a 20 or 25 year policy. By the time they are in college, you may have more than enough assets to replace your income if you should pass unexpectedly.

When you have the need for life insurance, also consider laddering and getting two policies. You can structure it so that you have $1M coverage for say, the first 10-15 years and then scale it down to $500K beyond that -or something like that. Just another way to optimize exactly what you need now and for how long. The downside of this is of course, there are a lot of unknowns here.

Cosmo

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