When did you get term life insurance? How long and how much?

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berg
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When did you get term life insurance? How long and how much?

Post by berg » Sun Aug 11, 2013 10:06 am

My wife and I are going to start trying for our first child soon. Starting to think about term life insurance. My wife is a teacher and I make 3 to 4x her salary in a given year.

Wondering what others have done. Some of my questions:
  • Should we get life insurance before we have thee baby? Did you? (I read somewhere it makes sense for the woman, maybe not for me)

    How long a term? 20, 25, 30 (we plan to have 2 to 3 children)

    How much coverage did you get? What did you base it on? Annual salary? Expenses? But what would expenses look like with a single parent vs. two of us. Do you factor in remaining mortgage? You vs. your significant other?

    Do you include expected interest in your calculations? For example, say I buy a $1MM policy. How do you factor in, that likely, with say 4% interest, this could produce $40k per year if invested conservatively, vs. saying the $1MM would be 20 years of $50k per year.

    How did you find a policy/broker?
Thanks!

livesoft
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Re: When did you get term life insurance? How long and how m

Post by livesoft » Sun Aug 11, 2013 10:14 am

We are probably the odd ones: We never purchased life insurance separately from what our jobs provided. We had our kids later on in life and did the math: If either one or both of us died, the survivors financial situation would be unaffected.

Don't forget Social Security survivors' benefits which may be substantial.
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Lon
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Re: When did you get term life insurance? How long and how m

Post by Lon » Sun Aug 11, 2013 10:28 am

I bought a very inexpensive $250,000 term policy at age 25. I didn't die so I cancelled it. :oops:

gerrym51
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Re: When did you get term life insurance? How long and how m

Post by gerrym51 » Sun Aug 11, 2013 10:33 am

as much as you can afford for as long as something bad if family left without your salary.

after this time you can cancel it

Texas hold em71
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Re: When did you get term life insurance? How long and how m

Post by Texas hold em71 » Sun Aug 11, 2013 10:37 am

We both took what was provided by our jobs until we got a mortgage. Our first mortgage required both of our meager salaries. We bumped it up at that point so that the other person could payoff the mortgage if the other died. No complicated math.

Once we had children, we looked at social security survivor benefits versus what it would take to raise a child to college age. That math gets more complex. Not sure what you read that said it does not make sense to insure the man in the marriage- particularly the primary earner.

What expenses are different? How much home maintenance do you do that your wife can do? If my husband dies, my calls to repairmen will go up until I figure out a few things. Do you work late or travel? Who will care for your children while you do that if your wife dies? Do you envision yourself working, caring for kids AND cleaning the house? Or will you hire a maid? Some expenses will go down- no car insurance, life insurance, clothing for deceased spouse, etc.

We could only afford to buy enough to cover expenses to college age. As the kids got older, there were fewer years until college so the extra would be enough to cover some college or some costs for the survivor beyond high school.

We elected too long of a term in retrospect (30 years). We probably could have gone with 20 since from birth if first child to graduation of second would be 20 years. As amount we wanted in insure has increased, we added a new policy with a shorter term. Going with a shorter term means you are counting on no health problems between now and the end of the term that will hurt your ability to get a new policy.

We factored in earnings but a fairly low level. Neither of us would have been comfortable putting money into an aggressive AA that was meant for our children. We have gotten more aggressive in our middle age but not when we had babies crawling around.

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bertie wooster
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Re: When did you get term life insurance? How long and how m

Post by bertie wooster » Sun Aug 11, 2013 10:39 am

We got 30 year 1 mil policies for each of us when my wife was pregnant. While it may be more than needed, it's relatively inexpensive and we can cancel when we feel our savings are sufficient. My only recommendation is to do it now before she gets pregnant b/c any difficulties you have during the pregnancy could wind up increasing her premium.

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Re: When did you get term life insurance? How long and how m

Post by dhodson » Sun Aug 11, 2013 10:48 am

you need to make an estimated guess of how much money would be necessary and during which period of time is this coverage necessary. Add a little to both and lock it in and dont get talked into permanent insurance or expensive term bc of some rider or convertibility feature. If both adults make tons of money and the death of one would have a big effect economically on the other then you need very little. You might want to have some to cover a brief period of grief and possibly additional costs for house cleaning etc that the other person was doing. If one person in the house makes all the money then you want a big policy on that person and possibly a small policy on the other for the reasons i mentioned. The main items one needs to protect are typically mortgage, kids education, current living costs, and retirement. I find it just easier to take what you make or might be making in the future if you realistically expect an significant increase and multiple by 10-15 since what you can spend on those items is a reflection of what you make. Keep in mind the ss benefits mentioned above and that this lump some of money would be invested once received. As time goes on, your insurance needs should decrease but inflation is also occurring and thus i would just slightly overestimate my needs and lock in either 20 or 30 year term. If i was very young and planning on having a bunch of kids id go with 30. If i were slightly more middle age like having kids 8 years old or more then id go 20 years. If i purchased a 20 year policy and 5 years later i had more kids or whatever happened such that i miscalculated then id get a new 20 year and afterwards surrender my old one. There is a risk of change in your ability to get insurance of course.

Buying tons more than you need is most likely just going to cost you more money since the odds if you are healthy are such that you are only going to get the death benefit up to around 4% of the time at most. It also makes such that you have less money for other items which you can enjoy today or other protection items such as disability insurance. Nobody has a crystal ball but dont let people prey on any fear you might have. You have to make a best guess. Go to a place like term4sale.com and get an estimate of what this should cost you. Have an independent agent shop your case around. It should be very close to the term4sale best quotes. If it isnt then there better be a good reason otherwise you need a new agent.

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Re: When did you get term life insurance? How long and how m

Post by user5027 » Sun Aug 11, 2013 11:06 am

You need to analyze what your family will need beyond what they will have, if you die and your salary is gone. Then you do the same for your wife. This varies over time.

Will your wife return to work or be a stay at home mom? If she is a stay at home mom and dies you will need day care. Day care for toddlers is different then when they are self sufficient teenagers.

It is further complicated with a special needs child.

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Re: When did you get term life insurance? How long and how m

Post by Grt2bOutdoors » Sun Aug 11, 2013 12:52 pm

I purchased term life insurance just prior to marriage and subsequently just prior to the birth of our child. In both instances, I purchased 30 year term, I could have purchased 20 year term and saved some premium money, but then I'd be banking on having super-preferred health status later in life that I had when I was younger - I didn't want to take that risk. I could always cancel the policies if my financial situation changed and didn't need them anymore. Purchase enough life insurance to cover your current and future liabilities: for me it was enough to take out the mortgage, allow my wife to be able to stay home for an extended period of time, enough to pay for 4 years of college. Take into account your current assets, social security that your minor child is eligible for until age 16 (or is it 18?) and spousal support payments. Term4sale.com
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Re: When did you get term life insurance? How long and how m

Post by lwfitzge » Sun Aug 11, 2013 1:08 pm

I chose a term that covers up to point in time where my wife would be fully retired and have full access to retirement savings, as well as be a point where both of my kids would be well out of college and independent. I got $1.5M coverage for 15 yrs starting at age 47. Previously when I was in corporate life, I used company provided insurance of about 3X salary. I'm an independent consultant now and just have the term coverage. My wife works FT and has a good salary and relative job stability so this seemed more than adequate for our situation.

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Re: When did you get term life insurance? How long and how m

Post by Meg77 » Sun Aug 11, 2013 1:48 pm

berg wrote:My wife and I are going to start trying for our first child soon. Starting to think about term life insurance. My wife is a teacher and I make 3 to 4x her salary in a given year.

Wondering what others have done. Some of my questions:
  • Should we get life insurance before we have thee baby? Did you? (I read somewhere it makes sense for the woman, maybe not for me)
    It is probably best to get it before having the baby, but not necessarily before getting pregnant. If it takes a few years for you guys to conceive, you basically are paying for those years of insurance which you don't need. On the other hand you don't want to wait until after the birth on the off chance your wife dies in childbirth or on the way home from the hospital. I'd get it when she is about 4-6 months along.

    How long a term? 20, 25, 30 (we plan to have 2 to 3 children)
    Go with 30 if you aren't sure. It'll get all 3 kids all the way through college. Plus 30 years gives you time to get your retirement savings set, so if you or your wife develops any cancer or other condition that may prevent you to get future insurance, you won't have to worry about reinsuring later.

    How much coverage did you get? What did you base it on? Annual salary? Expenses? But what would expenses look like with a single parent vs. two of us. Do you factor in remaining mortgage? You vs. your significant other?
    What you needs will probably be highest at the very beginning (1-3 small kids, loss of a highest income, highest debt balances) so go off current expenses when you buy (not salary). It'll soon be "too much" because childcare expenses and debt balances will drop over time, and your investments will rise. But who cares? You want to buy enough to a) pay off ALL debt b) pay for full time child care for 12 years and after school care for appx 30 years (since you're planning 3 kids and either of you would be a single working parent) c) fund college for 3 kids in today's dollars, d) and throw in 1-2 years of current income/expenses for the remaining spouse to take time off to grieve. Your wife may need a bit more more than you would for some income supplementation since her earnings will be lower - but on the other hand she's probably building a pension whereas you are not so it may be more even of a need than you think.

    Do you include expected interest in your calculations? For example, say I buy a $1MM policy. How do you factor in, that likely, with say 4% interest, this could produce $40k per year if invested conservatively, vs. saying the $1MM would be 20 years of $50k per year.
    You don't really want to worry about rates since you don't know what interest rates will be in the future anyway. But you can generally assume that you can get the proceeds to grow at the rate of inflation (whatever that might end up being). Therefore you don't have to try to calculate what food/housing/education will cost 6 or 18 years from now when the policy might be needed; instead you can use today's dollars to calculate the need and assume that if/when you get the proceeds you can invest them conservatively at the rate of inflation until they are needed.


    So calculate in todays dollars the following:
    4 years of full time nanny/daycare
    10 years of part time childcare (summers/after school)
    4 years in state tuition at your state's university
    Multiply that total by the number of kids you plan to have (or plan to add more insurance later when/if you have more kids). The total of the above 3 variables will be the same need for you or your wife if the other one passes away prematurely.
    Add in 1-2 years of current expenses so the grieving spouse can scale back or take time off. Add in whatever it would take to pay off all current debt. Round up to the nearest $100K. That's what you each need. I personally don't try to cover retirement in there because you're assuming the remaining spouse will still work and accumulate retirement savings/pension normally. Plus expenses will be lower what with no debt and education funded so there will be budget cushion and/or more room to save for either of you.

    Just my 2 cents!
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Re: When did you get term life insurance? How long and how m

Post by mike143 » Sun Aug 11, 2013 2:23 pm

I will probably do $1m once we produce a child, now 30, working on it now. For some reason my wife had a policy when we first met, I had her cancel it.
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Re: When did you get term life insurance? How long and how m

Post by mptness » Sun Aug 11, 2013 2:38 pm

gerrym51 wrote:as much as you can afford for as long as something bad if family left without your salary.

after this time you can cancel it
This seems like simple sensible advice, although I wonder if the affordable amount is ever described as a percentage of income.

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Re: When did you get term life insurance? How long and how m

Post by zebrafish » Sun Aug 11, 2013 3:26 pm

I got term life insurance when I had dependents (who'd be up the creek financially if I died). I found quotes online for term insurance.

You might want to get a policy for your wife before she gets pregnant, as pregnancy is not a risk-free situation, and she may develop a health problem while pregnant which affects her ability to get insurance later. I've seen people develop diabetes, hypertension, strokes, etc. during pregnancy with lasting effects...

I got 30 year term, because I figured I'd be able to self-insure by the time 30 years went by-- my kids would be out of school, my wife would have a death benefit from a pension, we'd have enough saved to self-insure, etc. But the term length the OP needs really depends on their current age, asset level, and how long they anticipate needing insurance.

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Re: When did you get term life insurance? How long and how m

Post by Drewman » Sun Aug 11, 2013 6:11 pm

I was 27 wife was 24. We had just got married,moved into gather, joined finances and purchased our home. Both in excellent health. We figured we would have a kid within 3 years (currently I am 29 and she is pregnant!). bought a 1 mil policy only on me.

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Re: When did you get term life insurance? How long and how m

Post by steve roy » Sun Aug 11, 2013 6:37 pm

I had it from late thirties to sixty-one. Had a twenty-year "flat" policy where the rates didn't go up; it would have paid off the house with change to spare. $250k, $500/year (as I remember.)

When I reached my sixties the policy's premiums jumped to thousands of dollars. By then the kids were grown, and the older one in his own career. We had pension plans with survivors benefits, a sizable money stash, so I hooked up and bailed out.

For us, the term insurance was to prevent disaster for survivors. We're past that now, so no term insurance.

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Re: When did you get term life insurance? How long and how m

Post by MathWizard » Sun Aug 11, 2013 6:53 pm

Had $130K through work. Soon after birth of first child bumped it by $250K with one year renewable term.
The $380K was over the recommended 10x of my salary, and we could afford that much.
I now have just under $500K term because that plus retirement assets exceeds $1 Million, which should be enough
for minimal living.

I Did not take inflation protection because retirement assets go up every year, so I figured the
$250K would slowly become less as I needed less.

The $250K then would probaby be $500K now.

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Re: When did you get term life insurance? How long and how m

Post by jlawrence01 » Mon Aug 12, 2013 12:00 am

Since my family has a history of diabetes and heart disease at a relatively early age, both my wife and I signed up for low cost term life insurance equal to 10x our salaries IN ADDITION to anything that our employers provided. Our thought was that the earlier you sign up for the coverage, the cheaper it is. We did that BEFORE we had any children.

That was a wise decision as I am currently uninsurable.

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Re: When did you get term life insurance? How long and how m

Post by IPer » Mon Aug 12, 2013 12:37 am

berg wrote:My wife and I are going to start trying for our first child soon. Starting to think about term life insurance. My wife is a teacher and I make 3 to 4x her salary in a given year.

Wondering what others have done. Some of my questions:
  • Should we get life insurance before we have thee baby? Did you? (I read somewhere it makes sense for the woman, maybe not for me)

    How long a term? 20, 25, 30 (we plan to have 2 to 3 children)

    How much coverage did you get? What did you base it on? Annual salary? Expenses? But what would expenses look like with a single parent vs. two of us. Do you factor in remaining mortgage? You vs. your significant other?

    Do you include expected interest in your calculations? For example, say I buy a $1MM policy. How do you factor in, that likely, with say 4% interest, this could produce $40k per year if invested conservatively, vs. saying the $1MM would be 20 years of $50k per year.

    How did you find a policy/broker?
Thanks!
First off the answer is most likely yes!

This is the perfect time for you to get a term policy, shoot for 15-20 years and make sure you note the date when it is suppposed to get price adjusted!

Looking back on the term insurance policy I purchased after dumping the whole life and annuity stuff around the 2nd kid the term policy I bought was perfect, though I should have made it for 15-20 years instead of 10. We have a total of 6 children and the term policy was purchased around the time we had 2 children and the eldest was around 3. So the policy was calculated based on current spending and a market return of roughly 6.5% after taxes. It was a double cover, my wife covered for around $1.4M and I for about $1.8M. The payments were fine for as long as it was in place, I was earning enough of course to "justify" the expenses though at this point in time they could have been a lot lower (learned a few tricks since then!).

After the 10 year expired there was an automatic increase, around 10% and that was ok as well but I believe could have been better. I kept paying through the 2nd increase for around 6-7 months when I finally realized it was way too high (out of line with market prices and out of line in terms of necessity vs current investments, etc.), so I cancelled it and am rearranging things for the current risk scenario.

The best advice I think I could give is make sure the term insurance policy carries you through the youngest child through age 18-20, or even 25 depending on your age and anticipated work situation. Also, understand very clearly how much the rates are to increase at the increase dates and/or get it extended (changed) BEFORE the increase dates, like a few years before! Most of these companies are glad to rearrange things according to current prices/offerings if you are early enough, other wise they are very glad to cancel your term policy, I found that interesting. FYI - My term policy was cancelled without a signature, no form, just a phone call.

Best regards, hope some of my info is helpful to you.
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Re: When did you get term life insurance? How long and how m

Post by IPer » Mon Aug 12, 2013 12:42 am

Grt2bOutdoors wrote:I purchased term life insurance just prior to marriage and subsequently just prior to the birth of our child. In both instances, I purchased 30 year term, I could have purchased 20 year term and saved some premium money, but then I'd be banking on having super-preferred health status later in life that I had when I was younger - I didn't want to take that risk. I could always cancel the policies if my financial situation changed and didn't need them anymore. Purchase enough life insurance to cover your current and future liabilities: for me it was enough to take out the mortgage, allow my wife to be able to stay home for an extended period of time, enough to pay for 4 years of college. Take into account your current assets, social security that your minor child is eligible for until age 16 (or is it 18?) and spousal support payments. Term4sale.com
I agree, this approach seems well rounded and very reasonable. I think the less disciplined the more of a gamble the 20 vs 30 years would be, 20 would have been perfect in my case. Others (that most likely would not be having this discussion) should most likely consider the 30 year.
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Re: When did you get term life insurance? How long and how m

Post by Valuethinker » Mon Aug 12, 2013 4:44 am

berg wrote:My wife and I are going to start trying for our first child soon. Starting to think about term life insurance. My wife is a teacher and I make 3 to 4x her salary in a given year.

Wondering what others have done. Some of my questions:
  • Should we get life insurance before we have thee baby? Did you? (I read somewhere it makes sense for the woman, maybe not for me)

    How long a term? 20, 25, 30 (we plan to have 2 to 3 children)

    How much coverage did you get? What did you base it on? Annual salary? Expenses? But what would expenses look like with a single parent vs. two of us. Do you factor in remaining mortgage? You vs. your significant other?

    Do you include expected interest in your calculations? For example, say I buy a $1MM policy. How do you factor in, that likely, with say 4% interest, this could produce $40k per year if invested conservatively, vs. saying the $1MM would be 20 years of $50k per year.

    How did you find a policy/broker?
Thanks!
A few thoughts:

- when your wife is pregnant she is probably uninsurable, or only very expensively so - because of antiselection (people at risk buy more insurance) insurance companies hate medical conditions

- consider 'phasing' policies ie get 2 30 year policies. As your financial position improves, you might wish then to lapse one of the policies but keep the other coverage

- the advice here about getting insurance whilst you are still in the highest health category is very germane. I have friends who are almost uninsurable (at affordable prices) because some genetic thing cropped up-- uncle died of heart attack at 50, wife carries the breast cancer gene, etc.). Your 30s and especially your 40s are not kind on health in that nature seems to have engineered to last 40 years, but not always beyond that (from a natural selection point of view, you can see how that would work)

- until you actually have a child, though, it's hard to assess needs

There are calculators on line, but consider:

- insuring to pay off the mortgage
- childcare expenses to age 18 (assuming your spouse continues working)
- 4 year college ($200k in the USA these days?)

That is kind of the bare minimum. I remember the 'wives of 9-11' who were fighting the government's blanket $1m offer (some number like that). The reason being that, if your husband was on 300k at Cantor Fitzgerald in the WTC, $1m was not a great payout- -would be a big drop in standard of living. The moral is you will need a lot of coverage if you are the primary breadwinner. And the converse, in terms of childcare.

I would think about $1m for yourself, maybe $500k for 25 years, $500k for 30 years-- another rule of thumb (no substitute for a full calculation) is 10x salary. Your wife I would consider waiting until after childbirth.

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G-Money
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Re: When did you get term life insurance? How long and how m

Post by G-Money » Mon Aug 12, 2013 10:05 am

berg wrote:Should we get life insurance before we have thee baby? Did you? (I read somewhere it makes sense for the woman, maybe not for me)
I believe some insurers will not issue policies to a woman who is pregnant when she applies. I could be wrong; maybe someone who knows the answer on this for sure will chime in. But I don't think it would hurt for her to apply before she is pregnant. IMO, best practices would be for you both to apply before trying to conceive.
berg wrote:How long a term? 20, 25, 30 (we plan to have 2 to 3 children)
When in doubt, I go longer. If you're young and healthy, term life insurance is cheap. You can always cancel a 30-year policy after 20 or 25 years. You can't (cheaply) extend a shorter term life policy. Three kids, each spaced 2 years apart, means #3 will be out of college roughly 27 years after #1 is conceived.
berg wrote:How much coverage did you get? What did you base it on? Annual salary? Expenses? But what would expenses look like with a single parent vs. two of us. Do you factor in remaining mortgage? You vs. your significant other?
I used a multiple of salary for me. I'm the sole breadwinner, so I wanted to make sure there was plenty of coverage, and I had no problem erring on the side of too much coverage. I started out at 25-30x annual income. After a few years, my income increased substantially, but I was slow to increase my coverage. When my coverage became more like 12-15x annual income, I applied for a new policy, which was back to between 25-30x annual income. I sleep better now.

My wife stays at home, so her coverage was based upon a very rough estimate of expenses we would incur trying to replace all the stuff she does.
berg wrote:Do you include expected interest in your calculations? For example, say I buy a $1MM policy. How do you factor in, that likely, with say 4% interest, this could produce $40k per year if invested conservatively, vs. saying the $1MM would be 20 years of $50k per year.
I don't get nearly that precise. I suppose, if pressed, I'd say I expected the insurance proceeds to roughly track inflation, so that I'd be able to get a 4% real SWR, or something like that.
berg wrote:How did you find a policy/broker?[/list]
Got a quote at Term4sale.com. With the quote, the website provides you a list of 3 agents in or near your zip code. The website clearly discloses that the agents have paid for the advertising/referral service. Since I think Term4Sale.com is an invaluable tool which greatly aids in the transparency of life insurance costs, I was happy to patronize one of those agents, and was sure to let them know I found them via Term4sale.com.
Don't assume I know what I'm talking about.

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Re: When did you get term life insurance? How long and how m

Post by MP173 » Mon Aug 12, 2013 1:27 pm

True story:

In 1997 my wife out of the blue stated we should take a look at life insurance. It was available thru both of our employers. In the past she had declared that "she didn't want to talk about it." We both signed up and within a year she was diagnosed with breast cancer and two years later she died.

Purchase the life insurance (term) while you are young, healthy and the insurance is available.

Ed

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Re: When did you get term life insurance? How long and how m

Post by minneapples » Mon Aug 12, 2013 2:38 pm

I am seeing several comments here that are, in my experience, misperceptions about pregnant womens' insurability.

Here's what I wrote in a recent post addressing this issue:
Old post, but I applied for a policy and had the physical shortly before learning I was pregnant. I'd heard the same as you and so was planning to get the policy finalized before getting pregnant, and was surprised when it happened so quickly (lots of friends with fertility problems led to its own kind of recency bias ) The life insurance company returned an underwritten policy, but I had to disclose my pregnancy in response to the update questions about recent doctor visits or medical developments. They insurance company then had some questions for me -- IIRC they wanted to know whether we'd used any ART or whether it was an "old fashioned" pregnancy, and whether I'd had any adverse pregnancy-related conditions like gestational diabetes or hypertension. But since it was a normal healthy pregnancy to that point, they ended up sticking to the same premium.

So yes, I think it is better to get it done before you get pregnant, because it is impossible to know who will end up with conditions like GD or hypertension, etc., but if you have a healthy pregnancy it's not necessarily going to affect your premiums. I did have to lean on them to re-review my file quickly so I didn't age up before the start date of the policy and have to go through underwriting AGAIN...
This was with Banner, fwiw.
So on the one hand, I don't think Meg77 gives sound advice when she suggests waiting to apply until your wife is 4-6 months along. For one thing, it can take longer to get a pregnant woman's application through underwriting, and you want the policy in force at the very latest by the date of your child's birth, in the event your wife dies in or just after labor. For another thing, depending on whether you and your wife conceive naturally or with medical assistance, or whether your wife suffers an ectopic pregnancy, gestational diabetes, preeclampsia, or other pregnancy-related condition (many of which are difficult to impossible to predict for a given woman before she gets pregnant), her rates could go up. So getting the policy before she gets pregnant guards against any of those possibilities -- either delays in getting the policy in force or premium increases due to pregnancy-related medical risks. Or, for that matter, any potential legal dispute with the carrier over whether you did or did not disclose all relevant information at the time your applied and executed the policy.

On the other hand, pregnant women are NOT uninsurable. Some carriers may give pregnant women crap rates, but if you shop around I think you will find that's easily avoided. So if your wife does get pregnant before she applies, or gets pregnant while her policy is going through underwriting, it may not affect her insurability or her rate at all, provided she is otherwise low risk.

Better safe than sorry, though, IMO. I suggest applying for coverage a few months before you intend to start trying. Less hassle and less risk if you get the coverage in place before she is pregnant. If she is otherwise healthy, the premium will be low enough that it won't matter in the scheme of things if you take a while to conceive. (Not to mention, if it takes a while for you to conceive, that could be related to other factors that will cause her rates to jump.)

For what it's worth, my husband and I got a 20year trm policy when we married to cover the mortgage plus a small amount of lost income, and a few years later when we started planning for our family, we took out about 10y income for each of us on a 30y term policy. The 20y policy will carry us through our baby's high school graduation, by which point we plan to have the mortgage paid off, and the 30y policy will cover family expenses through college. Given our other assets and our respective careers (earnings and stability) we were comfortable not covering more years of income. We both have additional coverage through our employer, which we treated as a cushion for any near-term losses but totally disregarded when looking at what we'd need a few years down the road -- since who knows what covereage we'll have through what job at that point.

Good luck on the insurance and on the eventual baby!
Last edited by minneapples on Mon Aug 12, 2013 2:50 pm, edited 2 times in total.

harrychan
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Re: When did you get term life insurance? How long and how m

Post by harrychan » Mon Aug 12, 2013 2:44 pm

I just got mine a few weeks back. We have two young children and initially though insurance through my employer would be sufficient. My work pays 5 x my salary which would be roughly $500k which would cover the mortgage and change. A well versed financial friend spoke to us and strongly urged us to buy term life outside our employer as we would have no coverage in case I lose my job. I went through an online broker, compared quotes and end up buying enough to cover the mortgage, basic living expense, and college for both of my boys. So the amount will heavily depend on how much you want to cover in the unlikelihood of death and how much you want your surviving family to have the need to support themselves. This will vary dramatically depending on your location and lifestyle.
This is not legal or certified financial advice but you know that already.

Rodc
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Re: When did you get term life insurance? How long and how m

Post by Rodc » Mon Aug 12, 2013 6:30 pm

I would base how much on expenses. We chose length to get the kids through college.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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kenyan
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Re: When did you get term life insurance? How long and how m

Post by kenyan » Mon Aug 12, 2013 7:09 pm

Bought when my first child was born, using a multiple of salary (and probably a lower multiple than many advocate). We self-insure for my wife, since she is a cancer survivor and her rates were outrageous despite her variant of cancer being one that is basically curable. I purchased a 25-year level term policy, which will carry me to my expected retirement date.
Retirement investing is a marathon.

asset_chaos
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Location: Melbourne

Re: When did you get term life insurance? How long and how m

Post by asset_chaos » Mon Aug 12, 2013 8:55 pm

When my wife and I bought a house, I took out the maximum life insurance available through my defined benefit plan because my wife wouldn't have been able to keep the house solely on her earnings. My employer subsidises the insurance, so it is very cheap. When we had children, I took out a 20 year term policy on my wife for $250k. The reasoning is that if my wife is no longer with us, either I have to quite work to look after the young children and do all the household work, or there are substantial bills for child care and hiring people to do the household work or there is some combination of both. The amount and length of the policy was an estimate of those costs until the youngest child (whose birth year at the time of taking out the policy was only estimated too) turned, say, 10. Our plan is that when the youngest child, who is now real, gets to 10, we'll cancel the policy on my wife. We were going to cancel the policy on me when the house is paid off in a couple of years, but, being subsidized, it's so inexpensive, I think we'll leave it in place until the last child is in or through college.
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Valuethinker
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Re: When did you get term life insurance? How long and how m

Post by Valuethinker » Tue Aug 13, 2013 3:30 am

minneapples wrote: On the other hand, pregnant women are NOT uninsurable. Some carriers may give pregnant women crap rates, but if you shop around I think you will find that's easily avoided. So if your wife does get pregnant before she applies, or gets pregnant while her policy is going through underwriting, it may not affect her insurability or her rate at all, provided she is otherwise low risk.

Better safe than sorry, though, IMO. I suggest applying for coverage a few months before you intend to start trying. Less hassle and less risk if you get the coverage in place before she is pregnant. If she is otherwise healthy, the premium will be low enough that it won't matter in the scheme of things if you take a while to conceive. (Not to mention, if it takes a while for you to conceive, that could be related to other factors that will cause her rates to jump.)
Thanks for the correction. In the UK I have had friends who were declined insurance whilst pregnant. Or as you say, at rates which were unaffordable.

Generally yes if your application is already in train then less issues/ hassle.

carolinaman
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Re: When did you get term life insurance? How long and how m

Post by carolinaman » Tue Aug 13, 2013 6:21 am

Term life is important to protect your family but so is disability insurance. Many people become disabled at relatively young ages and are no longer able to work. This could put an even greater burden on your family than your death. My employer paid for my disability insurance and many employers will provide this at either their or your cost. This is something you should consider.

Quickfoot
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Re: When did you get term life insurance? How long and how m

Post by Quickfoot » Tue Aug 13, 2013 9:58 am

I have 850,000, my wife has 500,000 both are 20 year terms, we are 32.

fcox85
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Re: When did you get term life insurance? How long and how m

Post by fcox85 » Tue Aug 13, 2013 10:04 am

I bought a policy on myself and my now wife when we were engaged, about 4 months before our wedding. I was 27, she was 24. Now I'm 28, and she's 25. She was about to go to China for a month and a half, and we were getting married shortly thereafter, so I figured it was a good time. I think I bought 500,000-600,000 on her, and around 650,000-750,000 on me. It was 20-year term.

We don't have children yet, but I assume I'll increase my coverage when we decide to go down that road.

Alexandria
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Re: When did you get term life insurance? How long and how m

Post by Alexandria » Sat Aug 17, 2013 11:58 am

I actually bought policy when pregnant with second child - got best rates. I believe it is more wise to get a policy before pregnant (as pregnancy can bring up health issues). {If my rating had been worse, due to temporary health issues, I would have re-applied after pregnancy}. We were in our 20s so was really dirt cheap. Our insurance was primarily for our kids, initially, because we did not rely on each other's income at all.

I am a little on the paranoid side, but know way too many people very young with freak health conditions (uninsureable). Including my spouse. I had a 20-year policy on him, so, phew! HE is completely un-insurable due to the classification of his health problem, though I believe the chance is about 0% that it will be a problem in the future. Just to say, it doesn't take a lot to get put into the "uninsureable" column.

Because of all of the above, I believe that getting as much as possible on the young side is the way to go. You can always change your policy to your circumstances later, if you maintain good health and can find good rates. A policy can always be cancelled and replaced.

At the time we bought term policies I would have told you we way over-insured, but since we were young and due to inflation, I feel the opposite just a decade later. Spouse's insurance is fine, but I didn't know he'd still be unemployed a decade later. I have supplemented my own policy in the interim because of new circumstances and still being thankfully healthy enough to get good and cheap insurance. Since my spouse has been unemployed for a decade, I am now considering the insurance for both him and the children. That was just not the case at all when we first bought life insurance.

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