Just bought Life Insurance, how did I do?

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abc123abc123
Posts: 2
Joined: Fri Feb 22, 2019 11:30 pm

Just bought Life Insurance, how did I do?

Post by abc123abc123 » Sat Feb 23, 2019 12:17 am

Male, 41. Bought a 20 year term policy for $1MM. Cost is $764/yr.

I actually received what was quoted which almost never happens because the quote was before they sent a vampire, err, nurse out to collect urine and blood samples.

We have one child and plan on one more. We're high income earners, max out retirement (401k, IRA), max out HSA family and invest a lot into 529. OUr daycare went down $250/month after the little man became a toddler so it's only $2200 or so a month! (I say this half sarcastically).

I didn't go with a broker and went with AIG. I previously reached out to some brokers on Yelp and gave them my stats and what they briefly quoted without delving into too much detail was actually a higher rate so I think the amount if alright.

AIG looks at each property of the lab work and assigns points, negative or positive depending on the results. The lower score the better. I ended up with -8 overall. Average life expectancy was 50. For my age and gender I was given 15 points right off the bat. I mention this only because it is my assumption this is the reason why I actually received what was quoted. Or am I wrong in assuming the quotes are top tier only to lure you in? Sort of like advertised mortgage rates, right?

I wanted 500k at first but my FIL didn't think it was enough, then again he's a rich doctor and is very frugal and pennywise, his and my MIL's funds are held in American Funds (that will be a separate thread on how to broach that subject with them).

I expect to FIRE soon because I save about 75% of my income and my wife saves not quite as much but way more than average.

To my fellow bogleheads, did I buy too much, did I get ripped off? Middle of the road? Lay it on me please! I don't to sound like a sucker when I'm telling my friends I got that rate at my age if I got swindled. Thank you.

tj
Posts: 2686
Joined: Thu Dec 24, 2009 12:10 am

Re: Just bought Life Insurance, how did I do?

Post by tj » Sat Feb 23, 2019 9:53 am

Did you check term4sale? My experience is that AIG is cheap and generous with underwriting

AkwardDoct@rd
Posts: 73
Joined: Tue Aug 11, 2015 11:59 pm

Re: Just bought Life Insurance, how did I do?

Post by AkwardDoct@rd » Sat Feb 23, 2019 10:04 am

Seems like a good rate

neilpilot
Posts: 2848
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

Re: Just bought Life Insurance, how did I do?

Post by neilpilot » Sat Feb 23, 2019 10:12 am

Even without info on your assets or SO's income, I question the need for term life.

sailaway
Posts: 768
Joined: Fri May 12, 2017 1:11 pm

Re: Just bought Life Insurance, how did I do?

Post by sailaway » Sat Feb 23, 2019 10:13 am

If you are approaching FI, not sure why you need any life insurance?

khangaroo
Posts: 39
Joined: Mon Dec 18, 2017 1:11 am

Re: Just bought Life Insurance, how did I do?

Post by khangaroo » Sat Feb 23, 2019 10:20 am

I got my life insurance through Zander Insurance (broker recommended by Dave Ramsey). I ran your stats through the system (41/M) with the assumption that you're tobacco-free, fit in the top health category, and in Oregon (used my state since I don't know yours).

The results are (cheapest 3):
AIG = $684/Y
Lincoln = $683/Y
Protective = $685/Y

If you were down one more health tier, the insurance jumps up to (cheapest 3):
AIG = $844
Lincoln = $839/Y
SBLI = $880

So I would say your insurance cost is fine. In the grand scheme of things, you're talking about a difference of $2k over 20 years... I wouldn't sweat it.

To your question of "Did I buy too much?" I used the DIME method to calculate my policy when I bought it. It stands for Debt, Income, Mortgage, and Education. If I die, what will my spouse need to pay-off all of our debt payments, what will they need to replace my income (this is the one that requires the most thought as there are multiple variables e.g, how long, % of income, etc.), how much do they need to pay off the mortgage, and how much to fully fund our children's education.

I think the important take-away is that you have a policy in place.

HEDGEFUNDIE
Posts: 3658
Joined: Sun Oct 22, 2017 2:06 pm

Re: Just bought Life Insurance, how did I do?

Post by HEDGEFUNDIE » Sat Feb 23, 2019 10:46 am

neilpilot wrote:
Sat Feb 23, 2019 10:12 am
Even without info on your assets or SO's income, I question the need for term life.
sailaway wrote:
Sat Feb 23, 2019 10:13 am
If you are approaching FI, not sure why you need any life insurance?
+1

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