Do I have enough insurance?

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BogleMelon
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Do I have enough insurance?

Post by BogleMelon » Tue Dec 12, 2017 3:05 pm

Family of 2 with no kids - 38 & 40 years - Renter (no house ownership) - I am the main earner...
My income $88K, DW income: $21K
Assets: $50K in cash - $45K in retirement accounts (Mostly Roth IRA- Protected from debtors according to my state laws)
Expenses is around $42000 per year
Current policies that I have:
Health insurance: Through employer (dental and vision included)
Renter insurance: Liability up to $100K
Life-term insurance: DW is the beneficiary: Policy#1 $250K to expire in 9 years / Policy#2 $500K to expire in 20 years- Our current regular annual
Disability insurance: Group policy (bad one as always) / Another Private one through Principal (got the maximum I could get + riders that enhance the definition of the word disability and other COLA rider..etc)
Auto Insurance: For 2 cars including full coverage- Liability is $500K for injuries or property damage

Do I need to add more of a life insurance, umbrella insurance or any other insurance? Or I am well protected at least for now?
Last edited by BogleMelon on Tue Dec 12, 2017 3:20 pm, edited 1 time in total.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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DaftInvestor
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Re: Do I have enough insurance?

Post by DaftInvestor » Tue Dec 12, 2017 3:09 pm

It depends upon the income disparity between you and your spouse.
You mention you are the "Main" earner but didn't state what that really means - if your spouse isn't far behind and can cover expenses if something should happen to you then you may not need any Life-Insurance. Without kids the math is pretty simple.

BogleMelon
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Re: Do I have enough insurance?

Post by BogleMelon » Tue Dec 12, 2017 3:12 pm

DaftInvestor wrote:
Tue Dec 12, 2017 3:09 pm

if your spouse isn't far behind and can cover expenses if something should happen to you then you may not need any Life-Insurance.
Currently she is not. May be soon she will.. but even then, I don't want her to worry about staying in the rat race forever, had I gone!
Last edited by BogleMelon on Tue Dec 12, 2017 3:24 pm, edited 1 time in total.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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DaftInvestor
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Re: Do I have enough insurance?

Post by DaftInvestor » Tue Dec 12, 2017 3:16 pm

BogleMelon wrote:
Tue Dec 12, 2017 3:12 pm
DaftInvestor wrote:
Tue Dec 12, 2017 3:09 pm

if your spouse isn't far behind and can cover expenses if something should happen to you then you may not need any Life-Insurance.
Currently she is not. May be soon she will.. but even then, I don't want her to worry about staying in the rate race forever, had I gone!
So right now you would leave here with $750K. Assume she does a 4% withdrawl the first year then adjusts for inflation (like a standard retirement calc) such that the money should last her at least 30 years - this would be 750*0.04 = $30K a year. Since your current expenses are $42K she would only need to earn $12K (but note those are your expenses together - with you gone - presumably this would go down - less food and clothing and gas and etc. expenses since you aren't there spending money).
EDIT add: Personally I think you are in good shape. She can sell your car and won't pay car insurance on it - then she is only buying food and clothing for 1 person versus 2 - so perhaps the $42000 in expenses per year drops to $30,000.
Last edited by DaftInvestor on Tue Dec 12, 2017 3:20 pm, edited 2 times in total.

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djpeteski
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Re: Do I have enough insurance?

Post by djpeteski » Tue Dec 12, 2017 3:17 pm

I think we need your and her income for the best answer. I think you are okay on liability. Also I am assume you mean 45K in retirement accounts?

BogleMelon
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Re: Do I have enough insurance?

Post by BogleMelon » Tue Dec 12, 2017 3:21 pm

djpeteski wrote:
Tue Dec 12, 2017 3:17 pm
I think we need your and her income for the best answer. I think you are okay on liability. Also I am assume you mean 45K in retirement accounts?
My income $88K, DW income: $21K
Yes $45K
Thanks
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

BogleMelon
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Joined: Mon Feb 01, 2016 11:49 am

Re: Do I have enough insurance?

Post by BogleMelon » Tue Dec 12, 2017 3:22 pm

DaftInvestor wrote:
Tue Dec 12, 2017 3:16 pm
So right now you would leave here with $750K. Assume she does a 4% withdrawl the first year then adjusts for inflation (like a standard retirement calc) such that the money should last her at least 30 years - this would be 750*0.04 = $30K a year. Since your current expenses are $42K she would only need to earn $12K (but note those are your expenses together - with you gone - presumably this would go down - less food and clothing and gas and etc. expenses since you aren't there spending money).
EDIT add: Personally I think you are in good shape. She can sell your car and won't pay car insurance on it - then she is only buying food and clothing for 1 person versus 2 - so perhaps the $42000 in expenses per year drops to $30,000.
How didn't I think about it this way before?! :oops:
Thank you!
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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djpeteski
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Re: Do I have enough insurance?

Post by djpeteski » Tue Dec 12, 2017 3:26 pm

DaftInvestor wrote:
Tue Dec 12, 2017 3:16 pm
So right now you would leave here with $750K. Assume she does a 4% withdrawl the first year then adjusts for inflation (like a standard retirement calc) such that the money should last her at least 30 years - this would be 750*0.04 = $30K a year. Since your current expenses are $42K she would only need to earn $12K (but note those are your expenses together - with you gone - presumably this would go down - less food and clothing and gas and etc. expenses since you aren't there spending money).
EDIT add: Personally I think you are in good shape. She can sell your car and won't pay car insurance on it - then she is only buying food and clothing for 1 person versus 2 - so perhaps the $42000 in expenses per year drops to $30,000.
I agree.

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