Term life + ss survivors benefits

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
User avatar
Topic Author
dandan14
Posts: 963
Joined: Wed Feb 11, 2009 7:32 am

Term life + ss survivors benefits

Post by dandan14 »

Can you folks help me think through something?

It seems at this point in my career, Social Security Survivor's benefits are fairly generous -- and would cover about 3/4 of our current living expenses should I die. (If my wife were to die, her survivors' benefits are much lower.)

So my thinking is that I could adjust my life insurance (covering my life) so that:

Savings + insurance payout would spin off enough money to supplement the SS benefits. Right?

After the kids are grown, the survivors benefit would no longer pay out, so I need to make sure that at that point, my wife could either fully live off the nest egg or have a job and supplement it with nestegg earnings.

Thoughts?
User avatar
FiveK
Posts: 10967
Joined: Sun Mar 16, 2014 2:43 pm

Re: Term life + ss survivors benefits

Post by FiveK »

One thought: how much is the cost difference between term life that would cover
- 1/4 of current living expenses, vs.
- 100% or even 150% of current living expenses (kids' college, etc.)?

And what fraction of current income is that difference?
Hillview
Posts: 396
Joined: Fri Feb 02, 2018 7:27 am

Re: Term life + ss survivors benefits

Post by Hillview »

Could be -- what about college savings? mortgage?
User avatar
Nate79
Posts: 6877
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Term life + ss survivors benefits

Post by Nate79 »

For me, the cost of term life is so low that I would rather be safe than sorry. Kids college, enough money for retirement, help with child care, pay off the house, etc. With SS survivors benefits probably makes me over insured but that's ok.
User avatar
Topic Author
dandan14
Posts: 963
Joined: Wed Feb 11, 2009 7:32 am

Re: Term life + ss survivors benefits

Post by dandan14 »

FiveK wrote: Sat Mar 31, 2018 10:10 am One thought: how much is the cost difference between term life that would cover
- 1/4 of current living expenses, vs.
- 100% or even 150% of current living expenses (kids' college, etc.)?

And what fraction of current income is that difference?
I'm only talking about cutting the policy on my life -- so I would probably save $250-$400/year depending on how much I cut. So that's fairly negligible in the grand scheme, but still it's money.
User avatar
Topic Author
dandan14
Posts: 963
Joined: Wed Feb 11, 2009 7:32 am

Re: Term life + ss survivors benefits

Post by dandan14 »

Hillview wrote: Sat Mar 31, 2018 10:14 am Could be -- what about college savings? mortgage?
I figure the mortgage is just part of the yearly living expenses. I've never really understood the logic of planning to pay off a house when someone dies.

College savings are reasonably well funded already.
User avatar
FiveK
Posts: 10967
Joined: Sun Mar 16, 2014 2:43 pm

Re: Term life + ss survivors benefits

Post by FiveK »

dandan14 wrote: Sat Mar 31, 2018 11:06 am So that's fairly negligible in the grand scheme, but still it's money.
Well summarized. Now the two of you get to decide which clause is more important. ;)
User avatar
BL
Posts: 9553
Joined: Sun Mar 01, 2009 2:28 pm

Re: Term life + ss survivors benefits

Post by BL »

dandan14 wrote: Sat Mar 31, 2018 9:27 am Can you folks help me think through something?

It seems at this point in my career, Social Security Survivor's benefits are fairly generous -- and would cover about 3/4 of our current living expenses should I die. (If my wife were to die, her survivors' benefits are much lower.)
Children covered to age 18 or finish h.school. Mother until youngest child is 16 if under income limits.
So my thinking is that I could adjust my life insurance (covering my life) so that:

Savings + insurance payout would spin off enough money to supplement the SS benefits. Right?

After the kids are grown, the survivors benefit would no longer pay out, so I need to make sure that at that point, my wife could either fully live off the nest egg or have a job and supplement it with nestegg earnings.
Surviving spouse SS at age 60 (reduced) or higher. I would shop around for lower cost term at independent agent or check term4sale.com for comparison. Would like to see enough to pay off the mortgage.

Thoughts?
Post Reply