Life Insurance Needed?

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Life Insurance Needed?

Post by black_knight_32 » Tue Jan 02, 2018 7:43 pm

Good Evening -
I'm debating whether or not I need to continue to pay for life insurance. I feel that we are in a spot that if something were to happen to my wife or myself(or both) our child would be financially stable. We have one child - 4 years old.

32 Years Old - Wife is 31
$1.4M Net Worth
$1M investable assets
Current annual expenses: Around $40K
Debt: Around $95K mortgage at 3.875%. Currently paying $1k a month to pay off early (normal payment $530).
Income: Me - $120k --- Wife - $30K


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Re: Life Insurance Needed?

Post by Compound » Tue Jan 02, 2018 8:13 pm

Is this term life insurance? How much coverage do you have and is the premium reasonable? Without more info, my guess is that you’re close to the point where it would make sense to ditch it, but maybe not yet.

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Re: Life Insurance Needed?

Post by defscott627 » Tue Jan 02, 2018 8:14 pm

I'd say keep it. You have a lot of assets but if something were to happen to you, why not have that extra padding to help pay more easily for your child's education as well as help the surviving spouse for a few years while going down to a single income? At your age the life insurance bill shouldn't be too expensive.

That's just my opinion.

If you don't mind me asking - I'm very curious to know how your net worth got so high on your salaries? (Not that either of your salaries are low, but the net worth is proportionally much higher than most would expect from a 150k household income).

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Re: Life Insurance Needed?

Post by 123 » Tue Jan 02, 2018 8:17 pm

$1M doesn't go as far as it used to.
The closest helping hand is at the end of your own arm.

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Re: Life Insurance Needed?

Post by Minty » Tue Jan 02, 2018 8:18 pm

Life insurance is needed for both parents, I think. If wife were to die, her labor would have to be replaced, and/or OP might want to take time off from work. If OP were to die, wife might have to stop work or hire day care. The $1M nest egg might allow for a $30 or $40 K annual drawdown, which might come close to annual expenses but leave nothing for, say, college savings or unexpected home repairs. In addition, I assume that the $40K annual expenses are post-tax, which means that somewhat more gross income is necessary to wind up with that amount in hand.

It may well be also that parental loss would mean other additional expenses, such as health insurance, unless coverage is available through both jobs.

Life insurance is cheap for early 30s buyers.
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Re: Life Insurance Needed?

Post by technovelist » Tue Jan 02, 2018 8:19 pm

How would your wife do if you got run over by the proverbial truck tomorrow?

I don't think you have enough investable assets to sustain her for the rest of her life, especially with a young child.

How much life insurance do you have, and for how long a term (assuming it is term)?
In theory, theory and practice are identical. In practice, they often differ.

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Re: Life Insurance Needed?

Post by FBN2014 » Tue Jan 02, 2018 8:57 pm

You definitely need LI. If you die, family loses 120K of income. Wife makes 30K. Is that part time income? Even if she went to work full time and doubled her income then she needs to pay for childcare most likely. The nest egg would need to be invested very conservatively and could provide $30,000/year assuming the markets don't tank. You need $2,000,000 of 30 year term insurance which you can buy for pennies on the dollar. This isn't for you it's for your family. Your wife should have 500K- 1 million on her also.

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