Optional Life Insurance (through employer)?

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UnLearnYourself
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Optional Life Insurance (through employer)?

Post by UnLearnYourself »

I just found out I'm going to have my 2nd baby and figured now's a good time to think about increasing my life insurance, and was hoping some Bogleheads with experience in this area could chime in on best practices as I think through my options.

Some basic info:

37 years old
Married
1st child 6 months old
2nd child due April of 2020

~ $230,000 mortgage balance (Owner occ 3-family, net monthly costs after collecting rent ~ $500)
~ $150,000 retirement savings
~ $20,000 liquid savings
~ $95,000 salary with 10% bonus (high likelihood to collect bonus annually, and high likelihood of 4% salary raise annually)
~ $95,000 life insurance policy entirely paid for by my employer
Currently signed up for an additional 1x optional life, which is option 1) below

Here are my life insurance options through my employer, based on multiples of salary, and assuming I easily pass the health screening:

1) $95,000 coverage for $2.86 per bi-weekly pay period ($74.36 per year, $2,230 total assuming 30 more years of employment/coverage)
2) $190,000 coverage for $5.73 per bi-weekly pay period ($148.98 per year, $4,469 total assuming 30 more years of employment/coverage)
3) $285,000 coverage for $8.56 per bi-weekly pay period ($222.56 per year, $6,676 total assuming 30 more years of employment/coverage)
4) $380,000 coverage for $11.42 per bi-weekly pay period ($296.92 per year, $8,907 total assuming 30 more years of employment/coverage)
5) $475,000 coverage for $14.26 per bi-weekly pay period ($370.76 per year, $11,122 total assuming 30 more years of employment/coverage)
6) $570,000 coverage for $17.12 per bi-weekly pay period ($445.12 per year, $13,353 total assuming 30 more years of employment/coverage)

I've read conventional thinking has me do a calculation of total monthly expenses, debts, assets, and accounts for additional elements like college savings, etc. That calculation can go a number of ways, particularly if I start accounting for things like K-12 private schooling, and private college education vs state, etc. All of those things are of course up in the air, but when I do the life insurance calculators most of them point to me opting into a policy in excess of $700k. Obviously that would set my family up to be very comfortable, cover all major expenses, and leave them a nice foundation for education, etc.

But I'm curious what the Bogleheads think about the above costs and benefits? As always any advice is very much appreciated!
SuperSaver1975
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Re: Optional Life Insurance (through employer)?

Post by SuperSaver1975 »

Does every employee get the exact same rate, regardless of age or gender? Or is the rate tailored to your age & gender? What I'm getting at is: will the rate you pay stay the same, or will the employer increase the rate each year?

Chances are you will change jobs at some point. Suppose you work there 12 years and change jobs. You'd be 49 years old and wanting to get a new life insurance policy (unless you've saved up enough to not need it any more), but the rate will be much higher. I prefer to shop around for life insurance and lock in a low rate for 10 to 20 years.
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UnLearnYourself
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Re: Optional Life Insurance (through employer)?

Post by UnLearnYourself »

SuperSaver1975 wrote: Wed Aug 21, 2019 2:38 pm Does every employee get the exact same rate, regardless of age or gender? Or is the rate tailored to your age & gender? What I'm getting at is: will the rate you pay stay the same, or will the employer increase the rate each year?

Chances are you will change jobs at some point. Suppose you work there 12 years and change jobs. You'd be 49 years old and wanting to get a new life insurance policy (unless you've saved up enough to not need it any more), but the rate will be much higher. I prefer to shop around for life insurance and lock in a low rate for 10 to 20 years.
It is age-based. But I hear your argument, and that totally justifies some homework to check pricing with a company outside of my employers option.
sport
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Re: Optional Life Insurance (through employer)?

Post by sport »

In my experience, life insurance through an employer was term insurance at a reasonable cost. However, if you were to leave that employer, the only option was to convert to an expensive whole life policy. Since I wanted to insure my insurability as well as protect my family, I always bought term life independently of my employers. It turned out that I had to change jobs a number of times due to employers going out of business, or moving out of state, or being bought out, etc. I was glad that my life insurance was not affected by any of that.
BruDude
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Re: Optional Life Insurance (through employer)?

Post by BruDude »

Buy your own life insurance outside of your employer. The chances of you staying with the same employer for the next 30 years are probably slim to none. The premium also goes up in 5-year age bands, so your calculations are incorrect. You probably need more like $1-1.5M instead of $570k.
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Artful Dodger
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Re: Optional Life Insurance (through employer)?

Post by Artful Dodger »

UnLearnYourself wrote: Wed Aug 21, 2019 2:40 pm
SuperSaver1975 wrote: Wed Aug 21, 2019 2:38 pm Does every employee get the exact same rate, regardless of age or gender? Or is the rate tailored to your age & gender? What I'm getting at is: will the rate you pay stay the same, or will the employer increase the rate each year?

Chances are you will change jobs at some point. Suppose you work there 12 years and change jobs. You'd be 49 years old and wanting to get a new life insurance policy (unless you've saved up enough to not need it any more), but the rate will be much higher. I prefer to shop around for life insurance and lock in a low rate for 10 to 20 years.
It is age-based. But I hear your argument, and that totally justifies some homework to check pricing with a company outside of my employers option.
I work with employers, and set up these types of plans. As you note, the costs will go up over time, usually in five year increments - reaching age 40, then 45, then 50, etc. The costs will start to escalate. And, as noted, if you leave your employer, you can elect to continue, but at a higher cost. If you have added some health conditions, cost will go up if you go out to the individual market. I would think at your age and in good health, you could get a 25 year $500K term plan for around $475 / month.
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UnLearnYourself
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Re: Optional Life Insurance (through employer)?

Post by UnLearnYourself »

Any suggestions on a level of insurance to purchase, whether it be with my employer or outside?

Any sense of what a fair price to pay is?
SuperSaver1975
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Re: Optional Life Insurance (through employer)?

Post by SuperSaver1975 »

Artful Dodger wrote: Wed Aug 21, 2019 2:57 pm I would think at your age and in good health, you could get a 25 year $500K term plan for around $475 / month.
Did you mean per year? I got a $500,000 policy around the same age as OP, I think a 15 year policy, for less than $300 per year.
Living Free
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Re: Optional Life Insurance (through employer)?

Post by Living Free »

get some quotes from term4sale.com or something like that to get a sense of what prices should be. I think you're quite under-insured (unless I missed some details) with only 1x or 2x salary covered; a general rule of thumb without diving into all the details is 10x salary. i'd favor getting some (or most to all; I have almost all of mine independent of my employer) of the insurance yourself for portability but if you get a good deal through your employer you could add some of that too.
deikel
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Re: Optional Life Insurance (through employer)?

Post by deikel »

I would go with an external provider

Here is a story to contemplate: You are employed with health insurance and life insurance through your employer. You get cancer, its quite bad and you need to take time off work to deal with it. After three months of absence you are automatically terminated by employer as per company policy and loose your health insurance AND life insurance. You decide for COBRA for now and want to switch to some open market place insurance later when you get the time for it since you need the continuous treatment, however another 6 months later your aggressive cancer does you in - you tapped into savings to cover cobra and the treatments extras, so not much money left and no life insurance for your family either.

Sure you can also die in a car crash - its just not so likely
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onthecusp
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Re: Optional Life Insurance (through employer)?

Post by onthecusp »

I've had my life insurance for about 20 years through a group rate offered through a professional (engineering) organization membership. I was a member anyway and the membership is not so expensive. Last I checked the rate was quite low compared to what I could find elsewhere. Now that I am getting older the rates are going up, but I'm on the fence about cancelling it anyway, given our retirement savings.

I have had additional policies through employers, but never paid for additional coverage since our outside coverage was "enough".
ncbill
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Re: Optional Life Insurance (through employer)?

Post by ncbill »

Max out the employer option & buy at least a $1 million, 20-year term plan as well.
123
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Re: Optional Life Insurance (through employer)?

Post by 123 »

At least half of your insurance coverage should be your own without employer involvement, all of it can be if that yields a lower cost (likely). While the coverage available through your employer is possibly "portable" (you can take it with you when you leave) the premium rate you pay will go up dramatically. Conversion of coverage from an employer provided coverage to an individual policy comes at a very high on-going premium because the risk to the insurer is so much higher. The risk is higher because the insurer does not know that you are working (which was the case when premiums were paid through payroll deduction) and people who are working are lower risk than those who are not and the only people who convert to an individual policy are those who cannot readily get insurance elsewhere due to being high risk (due to health or other factors).
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BruDude
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Re: Optional Life Insurance (through employer)?

Post by BruDude »

ncbill wrote: Wed Aug 21, 2019 3:44 pm Max out the employer option & buy at least a $1 million, 20-year term plan as well.
Buying a separate policy is still probably cheaper than the max coverage from the employer
rj342
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Re: Optional Life Insurance (through employer)?

Post by rj342 »

I did finally get some term life on my own about 13 years ago after a job change. My only dumb mistake in hindsight was just getting a 10 year term instead of 20. When I re upped I had had a sleep apnea diagnosis which boosted the premium more than just being ten years older would.

So lock in a long enough term based on ages of your kids and how long until retirement.

I do also have some extra (beyond the default 1 or 2x salary) through my current employer because below some threshold there is no medical screen and about cheapest possible for me. Also could get a bit on wife and, god forbid, son, dirt cheap.

FWIW it is not necessary to leave a widow who is richer than if you were still alive.
Last edited by rj342 on Wed Aug 21, 2019 4:35 pm, edited 1 time in total.
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Artful Dodger
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Re: Optional Life Insurance (through employer)?

Post by Artful Dodger »

SuperSaver1975 wrote: Wed Aug 21, 2019 3:20 pm
Artful Dodger wrote: Wed Aug 21, 2019 2:57 pm I would think at your age and in good health, you could get a 25 year $500K term plan for around $475 / month.
Did you mean per year? I got a $500,000 policy around the same age as OP, I think a 15 year policy, for less than $300 per year.
Yes, yes! - thanks for the correction! I meant $475 annual premium. Lowering to 20 or 15 years would cut rates to similar to yours.
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willthrill81
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Re: Optional Life Insurance (through employer)?

Post by willthrill81 »

UnLearnYourself wrote: Wed Aug 21, 2019 2:57 pm Any suggestions on a level of insurance to purchase, whether it be with my employer or outside?
I agree that life insurance should be purchased apart from any connection with your employer.

How much life insurance you need is very situation specific. For a young person, I think that at least 10 years of annual spending in life insurance is a reasonable starting point unless you have a significant net worth already.

Remember that the 'theory' is to only hold life insurance long enough until you build your assets to the point that you no longer need the life insurance at all. For this reason, it is often smart to use a 'tiered' approach where you have multiple policies of varying term lengths, roughly corresponding to your anticipated net worth growing over time and, as such, your need for life insurance going down. This might involve getting one policy for 10 years, another for 20, and another for 30, as an example. I didn't employ this approach when I bought a 20 year level premium term policy a decade ago but wish I had now.
UnLearnYourself wrote: Wed Aug 21, 2019 2:57 pmAny sense of what a fair price to pay is?
Use one of the web sites that shops around. You should find a very fair price.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
Big Dog
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Re: Optional Life Insurance (through employer)?

Post by Big Dog »

In my experience, life insurance through an employer was term insurance at a reasonable cost.
Disagree. For healthy individuals, purchasing term on the open market is almost always a better deal. It's cheaper, and it's portable, i.e., you won't lose your term if you lost your job.
MathWizard
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Re: Optional Life Insurance (through employer)?

Post by MathWizard »

If you can find a better deal on the private market, get it all at one place.

Sometimes, group policies give better rates, so in that case, I would talk 4x salary from employer and
the rest (6x?) as an individual. If you buy annually renewable, this would allow you to drop one or the other later
as your net worth increases, and the number of years you have to cover decreases.
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Nate79
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Re: Optional Life Insurance (through employer)?

Post by Nate79 »

Shop term4sale or zander for level term insurance.
classicindexer
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Re: Optional Life Insurance (through employer)?

Post by classicindexer »

My employer gives me 1.5X salary at no cost to me so I only have that. I wanted policies to be portable so I didn't buy anymore from my employer. Then I created a ladder and bought 20Y $500K and 30Y $500K term policies from TIAA which is a combined total of a $430 a year (was in my early 30s when I purchased the policies). The terms align with our financial goals - when the mortgage will be paid off, when kids will go to college, etc. Check out Zander insurance they're a broker who will give you quotes online pulled from multiple companies.
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Stinky
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Re: Optional Life Insurance (through employer)?

Post by Stinky »

Nate79 wrote: Wed Aug 21, 2019 5:17 pm Shop term4sale or zander for level term insurance.
+1.

These are two excellent sites. I personally prefer Zander.com.
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UnLearnYourself
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Re: Optional Life Insurance (through employer)?

Post by UnLearnYourself »

willthrill81 wrote: Wed Aug 21, 2019 4:39 pm
UnLearnYourself wrote: Wed Aug 21, 2019 2:57 pm Any suggestions on a level of insurance to purchase, whether it be with my employer or outside?
I agree that life insurance should be purchased apart from any connection with your employer.

How much life insurance you need is very situation specific. For a young person, I think that at least 10 years of annual spending in life insurance is a reasonable starting point unless you have a significant net worth already.

Remember that the 'theory' is to only hold life insurance long enough until you build your assets to the point that you no longer need the life insurance at all. For this reason, it is often smart to use a 'tiered' approach where you have multiple policies of varying term lengths, roughly corresponding to your anticipated net worth growing over time and, as such, your need for life insurance going down. This might involve getting one policy for 10 years, another for 20, and another for 30, as an example. I didn't employ this approach when I bought a 20 year level premium term policy a decade ago but wish I had now.
UnLearnYourself wrote: Wed Aug 21, 2019 2:57 pmAny sense of what a fair price to pay is?
Use one of the web sites that shops around. You should find a very fair price.
I really like these suggestions. So for example, this setup could look something like this?

10 year policy for ~ 1mil
20 year policy for ~ 500k
30 year policy for ~ 250k

Not saying those are the firm numbers I'd select, but knowing that after 10 years passes and the much larger policy drops off I would have saved X dollars over that time, thus reducing what I will need coverage for the next 20 years...then 10 years later the 20 year policy drops off leaving me with 10 more years of minimal coverage, again assuming that in the 20 years prior I've saved up enough to close that gap?
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Stinky
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Re: Optional Life Insurance (through employer)?

Post by Stinky »

UnLearnYourself wrote: Fri Aug 23, 2019 10:24 am
I really like these suggestions. So for example, this setup could look something like this?

10 year policy for ~ 1mil
20 year policy for ~ 500k
30 year policy for ~ 250k

Not saying those are the firm numbers I'd select, but knowing that after 10 years passes and the much larger policy drops off I would have saved X dollars over that time, thus reducing what I will need coverage for the next 20 years...then 10 years later the 20 year policy drops off leaving me with 10 more years of minimal coverage, again assuming that in the 20 years prior I've saved up enough to close that gap?
With a very small child and another on the way, I’d typically say that you have an insurance horizon of at least twenty years. So I’d lighten up or eliminate the 10 year policy, and move that coverage amount into the 20 year policy. While the insurance amount may seem high now, future inflation will make the coverage amount seem smaller as time goes on.

The price won’t be that much higher, and the protection will last until kiddos are close to flying away.
It's a GREAT day to be alive - Travis Tritt
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willthrill81
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Re: Optional Life Insurance (through employer)?

Post by willthrill81 »

UnLearnYourself wrote: Fri Aug 23, 2019 10:24 am
willthrill81 wrote: Wed Aug 21, 2019 4:39 pm
UnLearnYourself wrote: Wed Aug 21, 2019 2:57 pm Any suggestions on a level of insurance to purchase, whether it be with my employer or outside?
I agree that life insurance should be purchased apart from any connection with your employer.

How much life insurance you need is very situation specific. For a young person, I think that at least 10 years of annual spending in life insurance is a reasonable starting point unless you have a significant net worth already.

Remember that the 'theory' is to only hold life insurance long enough until you build your assets to the point that you no longer need the life insurance at all. For this reason, it is often smart to use a 'tiered' approach where you have multiple policies of varying term lengths, roughly corresponding to your anticipated net worth growing over time and, as such, your need for life insurance going down. This might involve getting one policy for 10 years, another for 20, and another for 30, as an example. I didn't employ this approach when I bought a 20 year level premium term policy a decade ago but wish I had now.
UnLearnYourself wrote: Wed Aug 21, 2019 2:57 pmAny sense of what a fair price to pay is?
Use one of the web sites that shops around. You should find a very fair price.
I really like these suggestions. So for example, this setup could look something like this?

10 year policy for ~ 1mil
20 year policy for ~ 500k
30 year policy for ~ 250k

Not saying those are the firm numbers I'd select, but knowing that after 10 years passes and the much larger policy drops off I would have saved X dollars over that time, thus reducing what I will need coverage for the next 20 years...then 10 years later the 20 year policy drops off leaving me with 10 more years of minimal coverage, again assuming that in the 20 years prior I've saved up enough to close that gap?
That might be fine. But if you look at most charts of portfolio growth, the bulk of it (at least 50% and usually more) comes in the last 10-15 years of accumulation. If you believe that that would likely apply to you, then you should invert those face amounts over the terms (i.e. $1 million for 30 years, $500k for 20 years, etc.). Another potentially big factor is if you have children. Once kids are grown, your need for life insurance may decrease sharply.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
J Dough
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Re: Optional Life Insurance (through employer)?

Post by J Dough »

Not too long ago, I shopped my life insurance policy. I looked at zander, term4sale, and healthIQ. I ended up going with Health IQ because it gave me the best price. I ended up with a policy from SBLI, which I was happy with.
MrBeaver
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Re: Optional Life Insurance (through employer)?

Post by MrBeaver »

UnLearnYourself wrote: Fri Aug 23, 2019 10:24 am
willthrill81 wrote: Wed Aug 21, 2019 4:39 pm
UnLearnYourself wrote: Wed Aug 21, 2019 2:57 pm Any suggestions on a level of insurance to purchase, whether it be with my employer or outside?
I agree that life insurance should be purchased apart from any connection with your employer.

How much life insurance you need is very situation specific. For a young person, I think that at least 10 years of annual spending in life insurance is a reasonable starting point unless you have a significant net worth already.

Remember that the 'theory' is to only hold life insurance long enough until you build your assets to the point that you no longer need the life insurance at all. For this reason, it is often smart to use a 'tiered' approach where you have multiple policies of varying term lengths, roughly corresponding to your anticipated net worth growing over time and, as such, your need for life insurance going down. This might involve getting one policy for 10 years, another for 20, and another for 30, as an example. I didn't employ this approach when I bought a 20 year level premium term policy a decade ago but wish I had now.
UnLearnYourself wrote: Wed Aug 21, 2019 2:57 pmAny sense of what a fair price to pay is?
Use one of the web sites that shops around. You should find a very fair price.
I really like these suggestions. So for example, this setup could look something like this?

10 year policy for ~ 1mil
20 year policy for ~ 500k
30 year policy for ~ 250k

Not saying those are the firm numbers I'd select, but knowing that after 10 years passes and the much larger policy drops off I would have saved X dollars over that time, thus reducing what I will need coverage for the next 20 years...then 10 years later the 20 year policy drops off leaving me with 10 more years of minimal coverage, again assuming that in the 20 years prior I've saved up enough to close that gap?
I was in a similar situation as you with slightly more in savings. When I made up a spreadsheet modeling the following needs:
  • Pay off debts
  • Portfolio size to make spouse FI so she can focus on the kids and life
  • Accounted for income of SS Widow and minor benefits
  • Sufficient lump sum to fund college funds to completeness necessary for 100% college funding assuming conservative growth from that point until college
It turned out that the college funding requirement caused the necessary insurance to be relatively flat until a few years before college, and then drop fairly quickly. I had considered a laddered system originally, but the overhead of two policies made a single policy only a couple of dollars more per month, which was worth it to me for simplicity.

But the exercise was very informative, so I do recommend it as an exercise.
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UnLearnYourself
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Re: Optional Life Insurance (through employer)?

Post by UnLearnYourself »

Stinky wrote: Fri Aug 23, 2019 10:35 am
UnLearnYourself wrote: Fri Aug 23, 2019 10:24 am
I really like these suggestions. So for example, this setup could look something like this?

10 year policy for ~ 1mil
20 year policy for ~ 500k
30 year policy for ~ 250k

Not saying those are the firm numbers I'd select, but knowing that after 10 years passes and the much larger policy drops off I would have saved X dollars over that time, thus reducing what I will need coverage for the next 20 years...then 10 years later the 20 year policy drops off leaving me with 10 more years of minimal coverage, again assuming that in the 20 years prior I've saved up enough to close that gap?
With a very small child and another on the way, I’d typically say that you have an insurance horizon of at least twenty years. So I’d lighten up or eliminate the 10 year policy, and move that coverage amount into the 20 year policy. While the insurance amount may seem high now, future inflation will make the coverage amount seem smaller as time goes on.

The price won’t be that much higher, and the protection will last until kiddos are close to flying away.
Smart. 19 years gets us to the point both would hypothetically be entering college so I like having the foundation of 20 years to start, so I'll scrap the 10 year from this approach. Then I guess it just comes down to crunching some numbers on need (or want) then getting some quotes and making final decisions on how to stage it all.
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Stinky
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Re: Optional Life Insurance (through employer)?

Post by Stinky »

UnLearnYourself wrote: Fri Aug 23, 2019 1:00 pm

Smart. 19 years gets us to the point both would hypothetically be entering college so I like having the foundation of 20 years to start, so I'll scrap the 10 year from this approach. Then I guess it just comes down to crunching some numbers on need (or want) then getting some quotes and making final decisions on how to stage it all.
Excellent! Please come back to the Board with any more questions that you have as you move through the process.
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CWhea1775
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Re: Optional Life Insurance (through employer)?

Post by CWhea1775 »

From the perspective of someone at the other end of this age equation (term policy just ending, re-upping for another 10 years would cost many $thousands per year), I'd say - buy it yourself after shopping around. Buying a long, level premium term insurance policy is probably the first financial thing anyone with dependents should do - before investing, buying a house, etc. It's really cheap when you are young. The risk of dying is low (that's why it's cheap) but the consequences of being uninsured for your dependents is devastating if it should happen.

Pick a good solid insurance company. Get more than you think you need, for longer than you think you need. The premiums will look ridiculously small in 20 years.

It's not for you, it's for them - wouldn't you want your beneficiaries to have "more" than they need rather than "just enough"?
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UnLearnYourself
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Re: Optional Life Insurance (through employer)?

Post by UnLearnYourself »

CWhea1775 wrote: Fri Aug 23, 2019 3:06 pm From the perspective of someone at the other end of this age equation (term policy just ending, re-upping for another 10 years would cost many $thousands per year), I'd say - buy it yourself after shopping around. Buying a long, level premium term insurance policy is probably the first financial thing anyone with dependents should do - before investing, buying a house, etc. It's really cheap when you are young. The risk of dying is low (that's why it's cheap) but the consequences of being uninsured for your dependents is devastating if it should happen.

Pick a good solid insurance company. Get more than you think you need, for longer than you think you need. The premiums will look ridiculously small in 20 years.

It's not for you, it's for them - wouldn't you want your beneficiaries to have "more" than they need rather than "just enough"?
First quotes I got over the weekend:

30-year term @ $1mil for $935 annually
20-year term @ $1mil for $502 annually

Any opinions on how this looks for a 37 yr old?

Any thoughts on the 20 vs 30 year term here?

I understand the value of this insurance should anything happen to me...but man it's a hard pill to swallow to consider spending $30k and (hopefully!) getting nothing out of it (I suppose other than the peace of mind that should anything happen my family is more than covered).
BruDude
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Re: Optional Life Insurance (through employer)?

Post by BruDude »

UnLearnYourself wrote: Mon Aug 26, 2019 10:30 am
CWhea1775 wrote: Fri Aug 23, 2019 3:06 pm From the perspective of someone at the other end of this age equation (term policy just ending, re-upping for another 10 years would cost many $thousands per year), I'd say - buy it yourself after shopping around. Buying a long, level premium term insurance policy is probably the first financial thing anyone with dependents should do - before investing, buying a house, etc. It's really cheap when you are young. The risk of dying is low (that's why it's cheap) but the consequences of being uninsured for your dependents is devastating if it should happen.

Pick a good solid insurance company. Get more than you think you need, for longer than you think you need. The premiums will look ridiculously small in 20 years.

It's not for you, it's for them - wouldn't you want your beneficiaries to have "more" than they need rather than "just enough"?
First quotes I got over the weekend:

30-year term @ $1mil for $935 annually
20-year term @ $1mil for $502 annually

Any opinions on how this looks for a 37 yr old?

Any thoughts on the 20 vs 30 year term here?

I understand the value of this insurance should anything happen to me...but man it's a hard pill to swallow to consider spending $30k and (hopefully!) getting nothing out of it (I suppose other than the peace of mind that should anything happen my family is more than covered).
20 years - Protective = $466
30 years - Protective = $872
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willthrill81
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Location: USA

Re: Optional Life Insurance (through employer)?

Post by willthrill81 »

UnLearnYourself wrote: Mon Aug 26, 2019 10:30 am
CWhea1775 wrote: Fri Aug 23, 2019 3:06 pm From the perspective of someone at the other end of this age equation (term policy just ending, re-upping for another 10 years would cost many $thousands per year), I'd say - buy it yourself after shopping around. Buying a long, level premium term insurance policy is probably the first financial thing anyone with dependents should do - before investing, buying a house, etc. It's really cheap when you are young. The risk of dying is low (that's why it's cheap) but the consequences of being uninsured for your dependents is devastating if it should happen.

Pick a good solid insurance company. Get more than you think you need, for longer than you think you need. The premiums will look ridiculously small in 20 years.

It's not for you, it's for them - wouldn't you want your beneficiaries to have "more" than they need rather than "just enough"?
First quotes I got over the weekend:

30-year term @ $1mil for $935 annually
20-year term @ $1mil for $502 annually

Any opinions on how this looks for a 37 yr old?

Any thoughts on the 20 vs 30 year term here?

I understand the value of this insurance should anything happen to me...but man it's a hard pill to swallow to consider spending $30k and (hopefully!) getting nothing out of it (I suppose other than the peace of mind that should anything happen my family is more than covered).
As the breadwinner, you don't buy term life insurance to get something out of it yourself, which you seem to understand but have a hard time accepting.

I understand your reticence. If you are able to change your financial plans so that you achieve financial independence in 20 years instead of 30, then you might have no need for the 30 year policy and could just get a 20 year $2 million policy.

When I took out a $1 million 20 year level-premium term policy in my late 20s, the premium was more than $500 annually, so for your age, that premium looks very reasonable.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
ivk5
Posts: 1143
Joined: Thu Sep 22, 2016 9:05 am

Re: Optional Life Insurance (through employer)?

Post by ivk5 »

Even when you’re buying an individual policy, it might help to think about it as a salary reduction in exchange for knowing your family will be taken care of when you’re gone. It’s a bit imprecise but may help psychologically.

(Imaginary numbers)
- $99k salary, and your family is taken care of in the event of your untimely demise
- $100k salary, but your family struggles in the event of your untimely demise
Which job offer would you accept? Better yet, what would your family choose? :D
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UnLearnYourself
Posts: 371
Joined: Tue Feb 01, 2011 9:19 pm

Re: Optional Life Insurance (through employer)?

Post by UnLearnYourself »

ivk5 wrote: Mon Aug 26, 2019 5:50 pm Even when you’re buying an individual policy, it might help to think about it as a salary reduction in exchange for knowing your family will be taken care of when you’re gone. It’s a bit imprecise but may help psychologically.

(Imaginary numbers)
- $99k salary, and your family is taken care of in the event of your untimely demise
- $100k salary, but your family struggles in the event of your untimely demise
Which job offer would you accept? Better yet, what would your family choose? :D
Good outline here. I totally see the value and despite it being a somewhat sticky dynamic to swallow, I fully believe in it and will certainly be buying a policy. Just gotta shop a bit more to make myself feel like I've got a solid price point.
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