Is $53 too much for life insurance for me and my wife?

[JB2013]

Hi guys. I just signed up for life insurance through an agent who happens to be a friend. My current quote is $38 per month for $500,000 for a 20 year term. My wife’s will be $15 per month for $100,000 for a 20 year term. So a total of $53 per month. We are both 34.

I’m just curious....how do these premiums seem to you? Do they seem high or average?

I looked on the Zander website that Dave Ramsey sponsors and i was quoted on their website to get $500,000 for 20 year term for $20, so a savings of $18. Grated this was just a quote and not actually completing the application they send, but it got me thinking that maybe I am overpaying. Would love to hear peoples opinions on this. Thank you!

[Smorgasbord]

Those might be great rates, or they might be bad. If you are a morbidly obese smoker who likes to cave dive and has a family history of heart disease, then those are amazingly good rates.

[BanquetBeer]

Couple years younger, pay $120/yr per 500k. Skinny/fit, healthy, non smoker/non adventurer.

I think term is like 10 years though. Why do you need 20? Assuming you are healthy and saving, my reason for life insurance is to cover kids cost. I figure by 10 years from now my retirement savings should be able to more than cover the remaining time (also note you get some amount of social security survivor benefit for kids)

[quantAndHold]

It depends. What are your living expenses currently? How much debt do you have? If one of you dies, how will that impact the other one financially? How long will it take the other to get things sorted and get on solid financial footing on their own? Do you have kids? Do you have disability insurance?

The answer is different if both people make similar incomes than if one is the breadwinner, for example. If one person makes most of the family money, the other probably doesn’t need life insurance at all, because the breadwinner can support themselves.

I think a lot of time young people who don’t have kids and don’t have a lot of debt don’t need anything beyond what they get for free at work. The surviving spouse will need some time to recover, both emotionally and financially, but then they will be able to support themselves.

That said, I’ve never seen rates that low. Where are you finding that?

[BanquetBeer]

I would disagree that the non working spouse doesn’t need insurance. If they die you will need to cover child care and likely other unseen costs (eating out more due to time crunch) unless you plan on remarrying - that may be even more expensive though based on marketability with kids.

[Stinky]

Hi guys. I just signed up for life insurance through an agent who happens to be a friend. My current quote is $38 per month for $500,000 for a 20 year term. My wife’s will be $15 per month for $100,000 for a 20 year term. So a total of $53 per month. We are both 34.

I’m just curious....how do these premiums seem to you? Do they seem high or average?

I looked on the Zander website that Dave Ramsey sponsors and i was quoted on their website to get $500,000 for 20 year term for $20, so a savings of $18. Grated this was just a quote and not actually completing the application they send, but it got me thinking that maybe I am overpaying. Would love to hear peoples opinions on this. Thank you!

Curious as to whether the quote that you received from the agent was from one of the companies on the Zander website.

Most of those companies that are on Zander have some degree of specialization in level premium term life insurance. Their prices are competitive.

If your agent's quote was from a company that, for example, provides car or homeowners insurance, it's quite possible that you could save a lot by going with a Zander company. There are several car and homeowners companies that own life insurance companies also, and often their life quotes are not very competitive.

[JB2013]

Thanks for the replies guys. We have two kids with one on the way. My wife stays at home with the kids so I'm the only one working. I chose 20 years since our kids are only 5 and 4. I figured something that would put them through college could be a good idea. I wanted some coverage for my spouse since we save a lot of costs on childcare.

We have some student loans of 19K and a mortgage of $228K left.

I'm a healthy guy with no medical conditions.

[JB2013]

Hi guys. I just signed up for life insurance through an agent who happens to be a friend. My current quote is $38 per month for $500,000 for a 20 year term. My wife’s will be $15 per month for $100,000 for a 20 year term. So a total of $53 per month. We are both 34.

I’m just curious....how do these premiums seem to you? Do they seem high or average?

I looked on the Zander website that Dave Ramsey sponsors and i was quoted on their website to get $500,000 for 20 year term for $20, so a savings of $18. Grated this was just a quote and not actually completing the application they send, but it got me thinking that maybe I am overpaying. Would love to hear peoples opinions on this. Thank you!

Curious as to whether the quote that you received from the agent was from one of the companies on the Zander website.

Most of those companies that are on Zander have some degree of specialization in level premium term life insurance. Their prices are competitive.

If your agent's quote was from a company that, for example, provides car or homeowners insurance, it's quite possible that you could save a lot by going with a Zander company. There are several car and homeowners companies that own life insurance companies also, and often their life quotes are not very competitive.

My friend works for State Farm where we also have our car and home. My friend gave me he $38 quote for $500,000 for 20 years. Zander seemed cheaper like I said which quoted me $20 for the same term and coverage.

[uclalien]

I’m just curious....how do these premiums seem to you? Do they seem high or average?

Go to www.term4sale.com and put in your information. It will tell you exactly what you would pay with dozens of other insurers.

[quantAndHold]

That being the case, I would raise your life insurance to at least $750k, and lower hers to $250k. If you die, she will have a mortgage, additional childcare expenses, and college down the road, and no current income or job history. It will take her some time to spin up a career. If she dies, you will have some one time costs for funeral and end of life medical, and additional childcare expenses, but you already have the income stream.

You have disability insurance for yourself, right?

[Stinky]

Hi guys. I just signed up for life insurance through an agent who happens to be a friend. My current quote is $38 per month for $500,000 for a 20 year term. My wife’s will be $15 per month for $100,000 for a 20 year term. So a total of $53 per month. We are both 34.

I’m just curious....how do these premiums seem to you? Do they seem high or average?

I looked on the Zander website that Dave Ramsey sponsors and i was quoted on their website to get $500,000 for 20 year term for $20, so a savings of $18. Grated this was just a quote and not actually completing the application they send, but it got me thinking that maybe I am overpaying. Would love to hear peoples opinions on this. Thank you!

Curious as to whether the quote that you received from the agent was from one of the companies on the Zander website.

Most of those companies that are on Zander have some degree of specialization in level premium term life insurance. Their prices are competitive.

If your agent's quote was from a company that, for example, provides car or homeowners insurance, it's quite possible that you could save a lot by going with a Zander company. There are several car and homeowners companies that own life insurance companies also, and often their life quotes are not very competitive.

My friend works for State Farm where we also have our car and home. My friend gave me he $38 quote for $500,000 for 20 years. Zander seemed cheaper like I said which quoted me $20 for the same term and coverage.

State Farm - excellent company for auto and home insurance. However, their life insurance rates are HIGH.

You can do better.

[sparksfly]

Hi guys. I just signed up for life insurance through an agent who happens to be a friend. My current quote is $38 per month for $500,000 for a 20 year term. My wife’s will be $15 per month for $100,000 for a 20 year term. So a total of $53 per month. We are both 34.

I’m just curious....how do these premiums seem to you? Do they seem high or average?

I looked on the Zander website that Dave Ramsey sponsors and i was quoted on their website to get $500,000 for 20 year term for $20, so a savings of $18. Grated this was just a quote and not actually completing the application they send, but it got me thinking that maybe I am overpaying. Would love to hear peoples opinions on this. Thank you!

For reference: I got $1M when I was 41 for about 59 a month for 20 year term. Your quote does look high given your age. I suggest taking a quote from protective.com. They have consistently low rates and are a reputed company. They are also Costco partner. If you go through Costco, you will get further discounts.

[MathWizard]

I went with annually renewable term life insurance.
With 20 or 10 year term you pay more early on for a cheaper
price later.

I got term insurance when I had the most to insure,the birth of my first child. This was the lowest net worth (negative net worth just coming out of grad school), and lowest pay I would ever have from then on. I had to get the most from limited dollars,so I got a 250K policy to go along with about 150K through work. That would be probably about 750K now.

As time went on, the work life insurance went up with salary, but not the 250K. I now pay close to 1200 per year 30 years later,but I'll be dropping it after this year, since I am now about FI.

[willthrill81]

Thanks for the replies guys. We have two kids with one on the way. My wife stays at home with the kids so I'm the only one working. I chose 20 years since our kids are only 5 and 4. I figured something that would put them through college could be a good idea. I wanted some coverage for my spouse since we save a lot of costs on childcare.

Is there a high likelihood that you will be financially independent in 20 years, when the policy would expire? If not, you need to change your plans in order to do so, increase the term of the policy, or both.

And, as noted above, your need for disability insurance is probably even greater than your need for life insurance, and your non-working spouse very likely does need some life insurance. The cost of childcare for three, if nothing else, could be substantial if she is gone.

[Ben Mathew]

As noted above, plug in your numbers at term4sale.com.

[BanquetBeer]

Brings up a question of at what asset level would one feel comfortable with dropping disability insurance? Assuming low risk office job.

There are all kinds of ranges to disability so hard to answer question. I guess I don’t feel like the risk is super high. Don’t actually think we have any.

[Derby]

Brings up a question of at what asset level would one feel comfortable with dropping disability insurance? Assuming low risk office job.

There are all kinds of ranges to disability so hard to answer question. I guess I don’t feel like the risk is super high. Don’t actually think we have any.

First part is easy. You can drop disability insurance when you can survive at the level you want without your work income.

Your second paragraph makes me shudder. The risk of your house burning down is pretty low, but I bet you have homeowner's insurance. Your office job is low risk, but what about that guy on his cellphone on the freeway on your drive home? What if you trip on a curb and get bilateral wrist fractures?

You don't get disability insurance based on the likelihood of being disabled, but rather based on the catastrophic consequences if it does happen. And you're more likely to be disabled than die, depending on your age.

Sorry for the strident tone, but unless you're already financially independent, you need disability insurance.

[willthrill81]

Brings up a question of at what asset level would one feel comfortable with dropping disability insurance? Assuming low risk office job.

There are all kinds of ranges to disability so hard to answer question. I guess I don’t feel like the risk is super high. Don’t actually think we have any.

First part is easy. You can drop disability insurance when you can survive at the level you want without your work income.

Your second paragraph makes me shudder. The risk of your house burning down is pretty low, but I bet you have homeowner's insurance. Your office job is low risk, but what about that guy on his cellphone on the freeway on your drive home? What if you trip on a curb and get bilateral wrist fractures?

You don't get disability insurance based on the likelihood of being disabled, but rather based on the catastrophic consequences if it does happen. And you're more likely to be disabled than die, depending on your age.

Sorry for the strident tone, but unless you're already financially independent, you need disability insurance.

Disability insurance is probably more needful for most folks than even life insurance. If you're dead, you don't keep consuming resources after your funeral. But you do if you're disabled, and it's more likely that you'll become disabled than die in the middle of your career.

[Stinky]

Brings up a question of at what asset level would one feel comfortable with dropping disability insurance? Assuming low risk office job.

There are all kinds of ranges to disability so hard to answer question. I guess I don’t feel like the risk is super high. Don’t actually think we have any.

First part is easy. You can drop disability insurance when you can survive at the level you want without your work income.

Your second paragraph makes me shudder. The risk of your house burning down is pretty low, but I bet you have homeowner's insurance. Your office job is low risk, but what about that guy on his cellphone on the freeway on your drive home? What if you trip on a curb and get bilateral wrist fractures?

You don't get disability insurance based on the likelihood of being disabled, but rather based on the catastrophic consequences if it does happen. And you're more likely to be disabled than die, depending on your age.

Sorry for the strident tone, but unless you're already financially independent, you need disability insurance.

Disability insurance is probably more needful for most folks than even life insurance. If you're dead, you don't keep consuming resources after your funeral. But you do if you're disabled, and it's more likely that you'll become disabled than die in the middle of your career.

+1

Absolutely correct.

[ralph124cf]

I plugged in your numbers at term4sale. I see that you can buy $500K 20 year term for $20/month, but only if you are in exceptional health, and you were careful to choose your parents and siblings wisely (in terms of their disease history). This is called "preferred plus" in insurance speak. Very few people actually qualify for this status.

Very good health and family history would be "preferred" status, and would cost about 40% more. Normal good health and family history would be "regular plus", and would cost about $35/month.

Unless you are a marathon runner with all of your parents and grandparents alive and well it sounds like you have gotten a quite reasonable deal.

Check for an annual payment discount.

Ralph

[wassabi]

I got 500k term life insurance with no medical exam for $340/year from Lincoln Financial. The product I got was geared toward "younger" people hence no requirement for medical exam; however, I was hardly young when I got it (39 years old). My wife is a few years younger and she pays about $300/year for 500k/20 year.

[MarkBarb]

$1.5M 20 year term starting at age 40 for $75/month for me. $250K 20 year term starting at age 41 for wife. She was a SAHM. I'm happy to say that it has been an almost total waste of money. My policy is with Banner Life. I think I got it through Select Quote, but it's been 15 years.

I don't think I really need it anymore, but I keep it because I like the odds.

[BruDude]

1. You really need more coverage. Probably a lot more.
2. Bumping your wife’s policy to $250k or $500k will have a pretty small cost difference. At $15/mo half of your entire cost is the policy fee. She can probably get $500k 20 years for $25/month if she’s in good health.
3. State Farm is not competitive at all for life insurance. This is the problem buying from a friend. Now if you replace it with something cheaper you have created a relationship problem with your friend. If it’s a good friend that you are trying to help out, keep it for at least a year so he doesn’t lose the commission. After that he won’t care if you drop it since he already got paid.

I’m an agent myself and if a friend asked me to help him get a policy and then turned around and replaced it to save a few dollars a month I’d be pretty annoyed after having done all the work.

[miamivice]

Hi guys. I just signed up for life insurance through an agent who happens to be a friend. My current quote is $38 per month for $500,000 for a 20 year term. My wife’s will be $15 per month for $100,000 for a 20 year term. So a total of $53 per month. We are both 34.

I am curious why you signed yourself up for 5x times the life insurance as your spouse?

[Grt2bOutdoors]

Hi guys. I just signed up for life insurance through an agent who happens to be a friend. My current quote is $38 per month for $500,000 for a 20 year term. My wife’s will be $15 per month for $100,000 for a 20 year term. So a total of $53 per month. We are both 34.

I am curious why you signed yourself up for 5x times the life insurance as your spouse?

OP is primary breadwinner, wife is SAHM. That said, agree with BruDude, the OP and wife are both underinsured. IMO, I don't think the friend was doing the OP any favors if he had suggested the coverage amounts. A $100K policy is not going to replace the services of a SAHM for any significant amount of time. That is what the OP needs to consider - quality and amount of services SAHM is providing (substantial in my opinion), replacing that for a period of time will be costly, a $100K policy is not going to payoff the mortgage either. As for the OP - at least 10x your gross salary or some amount plus all of your outstanding and expected liabilities over the term you are insuring for; mortgage, college expenses, daycare if wife needs to become gainfully employed at some point. A $500K policy is not going to cover it.

Also agree with others, Snake Farm is one of the highest priced in life insurance, they constantly try to get me to buy a policy from them. Compare the prices they offer with quotes from Term4Sale or Zander, it's no contest. Their bread and butter is in the P&C market (property and casualty), life insurance is just an add-on business for them.

[miamivice]

Hi guys. I just signed up for life insurance through an agent who happens to be a friend. My current quote is $38 per month for $500,000 for a 20 year term. My wife’s will be $15 per month for $100,000 for a 20 year term. So a total of $53 per month. We are both 34.

I am curious why you signed yourself up for 5x times the life insurance as your spouse?

OP is primary breadwinner, wife is SAHM. That said, agree with BruDude, the OP and wife are both underinsured.

$100k is not nearly enough to cover the cost of outsourcing services that a SAHM provides. Daycare along is $18k per year per kid.

[remomnyc]

If you're both in prime health, then you could probably do better on premiums. We got our policies through selectquote.com. Like others, I wonder if you have enough term life and am concerned about the lack of disability insurance. We each bought a $1M, 20-yr term policy and based our coverage on the amount required to fund college for two kids (assuming 4 years private) and pay off the mortgage, assuming the surviving parent would continue to work.

[Smorgasbord]

$100k is not nearly enough to cover the cost of outsourcing services that a SAHM provides. Daycare along is $18k per year per kid.

Don't forget that the $100k may be in addition to social security insurance. As an example, based on the SSI calculator, if his wife made $40,000 from 2007 to 2010, the children's survivor benefit is $930 a month.

[SimonJester]

Hi guys. I just signed up for life insurance through an agent who happens to be a friend. My current quote is $38 per month for $500,000 for a 20 year term. My wife’s will be $15 per month for $100,000 for a 20 year term. So a total of $53 per month. We are both 34.

I’m just curious....how do these premiums seem to you? Do they seem high or average?

I looked on the Zander website that Dave Ramsey sponsors and i was quoted on their website to get $500,000 for 20 year term for $20, so a savings of $18. Grated this was just a quote and not actually completing the application they send, but it got me thinking that maybe I am overpaying. Would love to hear peoples opinions on this. Thank you!

Find out what rating class your friend's insurance company put you in, then go compare prices from Zander and term4sale.

FYI I purchased a $500K 20 year policy through Zander. Was rated at preferred plus nontabaco, about the same age as you and pay $23 per month...

[smectym]

With 3 Kids, and your young (for insurance underwriting purposes) age, $500,000 coverage is skimpy.

The chance of anything fatal happening to either of you is amazingly small; so obviously the life insurance company is making a bet heavily in their favor, at almost any price of insurance. But that’s OK; that’s how life insurance companies stay in business. Of course within that paradigm you try to get the best deal.

Opting for higher levels of coverage comes with certain economies of scale, so for each additional million of coverage you’re going to pay less than for the previous million. I would suggest at least 1 million per kid, 15 or 20 year term depending on their age, if your budget can afford it.

Later on, when the kids can fend for themselves, just drop the coverage like a hot potato. Don’t bother trying to renew it. The premiums become onerous as you age—but by then they’re no longer necessary.

Smectym

[Maven]

39 & 40 years old with $500k each for 20 years. Healthy, active, non-smokers, adventurers. We pay $50/month for both.

[Valuethinker]

Thanks for the replies guys. We have two kids with one on the way. My wife stays at home with the kids so I'm the only one working. I chose 20 years since our kids are only 5 and 4. I figured something that would put them through college could be a good idea. I wanted some coverage for my spouse since we save a lot of costs on childcare.

We have some student loans of 19K and a mortgage of $228K left.

I'm a healthy guy with no medical conditions.

EDIT: apologies I did not read the above posts first - mea culpa. However I shall leave what I wrote as it stands, as an additional voice.

It depends on your income but you feel like underinsured to me.

228 + 19 leaves your wife with 253k to live on. OK she will get a job. But with 3 young children to juggle it won't be a great job - it will have to be one that she can juggle childcare with (as well as paying for childcare). She might only make $40k pa - it's enough to get 3 kids to 18 (given no mortgage) but it's not a lot more. Remember too she would have to fund her own retirement.

Of course if your wife can restart a high paying profession that's different - but people out of the workforce in most fields find that hard.

Yes you would need childcare if your wife was not there. Your career progression would likely be less, too - more time spent at home with the kids, depending on profession fewer/ no business trips etc. However are pregnant women insurable? I am not sure if they are.

The 20 year term feels about right - your last child will be over 18 by then. There is a strategy of having 2 policies: 1 20 year and 1 30 year, and then as your insurance needs decline with greater investment portfolio you can lapse one of the policies. The trick is to lock in a low rate now, when you are young and healthy. You may however not need insurance past 20 years from now (depending on how your savings go).

But the amount? "To leave your spouse and family in the same position as if you had not died" -- taking into account all their sources of income and wealth. I don't feel that this would do this.

Term life assurance, guaranteed premium, 20 year at your age and health is dirt cheap (or should be). There's a term insurance comparison engine that's cited around here: compare Term or something like that?

Did your friend do an insurance needs questionnaire?

My guess is you need something like $750k-1m on your life. But that's only a guess -- I don't know your income and expenses.

[Valuethinker]

Brings up a question of at what asset level would one feel comfortable with dropping disability insurance? Assuming low risk office job.

There are all kinds of ranges to disability so hard to answer question. I guess I don’t feel like the risk is super high. Don’t actually think we have any.

Agree with all who shudder.

Bad back is a leading form of office disability. Very hard to quantify, treatment protocols are bad to useless (there is good stuff being done with chronic pain management, but back surgery has one of the lowest success rates of any surgery in terms of pain relief).

ME is another - they don't even agree it's an illness, but if you have ever known anyone with it, it is debilitating. MS is yet another - all the MS in the world, pretty much, occurs in northern climates (lack of sunlight is implicated).

I could go on, but as another poster pointed out, that idiot on the freeway texting on his phone ...

[miamivice]

$100k is not nearly enough to cover the cost of outsourcing services that a SAHM provides. Daycare along is $18k per year per kid.

Don't forget that the $100k may be in addition to social security insurance. As an example, based on the SSI calculator, if his wife made $40,000 from 2007 to 2010, the children's survivor benefit is $930 a month.

I think the point that I am trying to make is that $100k would not nearly cover the cost of outsourcing the roles that a SAHM would perform raising kids until 18. Kids take a ton of time and it would cost a cost.

I am also saying that putting $500k on yourself and $100k on your spouse is sure backpatting your own contributions to your family, while undevaluing your spouses.

[Smorgasbord]

I think the point that I am trying to make is that $100k would not nearly cover the cost of outsourcing the roles that a SAHM would perform raising kids until 18. Kids take a ton of time and it would cost a cost.

I am also saying that putting $500k on yourself and $100k on your spouse is sure backpatting your own contributions to your family, while undevaluing your spouses.

Let's run some numbers.

JB2013 mentions that he and his wife are both 34 and have kids that are 5, 4, and one on the way. That means Mrs. JB2013 had her first kid around 2014 at the age of 29, and likely worked from 2006 (age 21) to 2013. I'll assume she made $40k a year during those working years. If she were to die in childbirth, the monthly social security benefit would be the family max of $3656 until 2033 when the kids start to turn 19. Adding SSI to the 100k policy, the total insurance on Mrs. JB2013 is about $825k. SSI payments are inflation adjusted, and the benefits to kids are separate from Mr. JB2013's income so they generally won't pay taxes on it.

Now, let's image Mr. JB2013 dies tomorrow. Based on previous posts, he makes $87,000 a year, and pre-2017 was making about $74,000. In that case, the family's SSI benefit would be $4434 a month till the kids start turning 19. Adding in the $500k policy, his total insurance is $1.38 million, or only about 65% more than Mrs. JB2013.

[miamivice]

I think the point that I am trying to make is that $100k would not nearly cover the cost of outsourcing the roles that a SAHM would perform raising kids until 18. Kids take a ton of time and it would cost a cost.

I am also saying that putting $500k on yourself and $100k on your spouse is sure backpatting your own contributions to your family, while undevaluing your spouses.

Let's run some numbers.

JB2013 mentions that he and his wife are both 34 and have kids that are 5, 4, and one on the way. That means Mrs. JB2013 had her first kid around 2014 at the age of 29, and likely worked from 2006 (age 21) to 2013. I'll assume she made $40k a year during those working years. If she were to die in childbirth, the monthly social security benefit would be the family max of $3656 until 2033 when the kids start to turn 19. Adding SSI to the 100k policy, the total insurance on Mrs. JB2013 is about $825k. SSI payments are inflation adjusted, and the benefits to kids are separate from Mr. JB2013's income so they generally won't pay taxes on it.

Now, let's image Mr. JB2013 dies tomorrow. Based on previous posts, he makes $87,000 a year, and pre-2017 was making about $74,000. In that case, the family's SSI benefit would be $4434 a month till the kids start turning 19. Adding in the $500k policy, his total insurance is $1.38 million, or only about 65% more than Mrs. JB2013.

So, if Mrs. JB2013 dies during childbirth, will 825k cover the extra expenses incurred in raising children to age 18?

If Mr. JB2013 dies during childbirth (car accident on way to hospital), will $1.38 million be required to cover the extra expenses in raising children to 18?

That is the question that JB2013 needs to answer, to decide if he picked the right amount of life insurance.

(Personally, as a father of two kids, I am far more worried about what I would do in the absence of my wife than she is in the absence of me. A lot of what my wife does for our family is very difficult or very expensive to replace, while what I do for the family is primarily income which can readily be replaced.)

[il0kin]

Age 30, 400k private policies enacted at age 26. $23/mo for me (male, good health) and $16/mo for wife (good health. I'd say the prices you were quoted at age 34 are not unreasonable and probably about market rates. May be able to find it a bit less expensive elsewhere but make sure you check the credit ratings of the company. My thought was that by 46 we should be close to FI with a low mortgage balance and projected to hit $1M in retirement savings in our mid-40's, so a 20 year term would be fine.

I stack the 400k policies with an additional 1.5x salary, plus 360k buy-up via work as that's what I can buy-up without going through all their biometric testing. Our only debt is our mortgage at about 222,000 and we have two young kids. Don't forget that the kids (and survivor, I believe) would get SS benefits which help offset the costs of raising children, also.