How much term life insurance do I need?

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davebo
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How much term life insurance do I need?

Post by davebo » Thu Feb 13, 2020 4:04 pm

Married, 3 kids (11, 10, and 8)
529 Savings: $160K
Retirement: $750K plus my wife has 18 years in a teacher pension
Liquid: Roughly $140K
My income: $110K
Wife's Income: $80K
Existing Life Insurance:
-9 years to go on a $300K policy
-3x salary through work ($300K)
-Mortgage for $330K is our only debt.

How much would you get in this case?

lessismore22
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Location: USA

Re: How much term life insurance do I need?

Post by lessismore22 » Thu Feb 13, 2020 4:24 pm

Why do you think you need more?

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Stinky
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Re: How much term life insurance do I need?

Post by Stinky » Thu Feb 13, 2020 4:31 pm

davebo wrote:
Thu Feb 13, 2020 4:04 pm
Married, 3 kids (11, 10, and 8)
529 Savings: $160K
Retirement: $750K plus my wife has 18 years in a teacher pension
Liquid: Roughly $140K
My income: $110K
Wife's Income: $80K
Existing Life Insurance:
-9 years to go on a $300K policy
-3x salary through work ($300K)
-Mortgage for $330K is our only debt.

How much would you get in this case?
I’d get another $750k or so, in 15 year level term.

My desire is to replace your after tax income until kiddo #3 has flown the nest. Say he does that at age 23 - that’s 15 years from now.

15 years of after tax income of $90k (my guess) is $1.35 million total insurance amount. Reduce this by your current $600k to get my recommended $750k.

Feel free to round up to $1 million of new insurance. The cost increase over $750k should be minimal.
It's a GREAT day to be alive - Travis Tritt

barnaclebob
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Re: How much term life insurance do I need?

Post by barnaclebob » Thu Feb 13, 2020 5:50 pm

Stinky wrote:
Thu Feb 13, 2020 4:31 pm
davebo wrote:
Thu Feb 13, 2020 4:04 pm
Married, 3 kids (11, 10, and 8)
529 Savings: $160K
Retirement: $750K plus my wife has 18 years in a teacher pension
Liquid: Roughly $140K
My income: $110K
Wife's Income: $80K
Existing Life Insurance:
-9 years to go on a $300K policy
-3x salary through work ($300K)
-Mortgage for $330K is our only debt.

How much would you get in this case?
I’d get another $750k or so, in 15 year level term.

My desire is to replace your after tax income until kiddo #3 has flown the nest. Say he does that at age 23 - that’s 15 years from now.

15 years of after tax income of $90k (my guess) is $1.35 million total insurance amount. Reduce this by your current $600k to get my recommended $750k.

Feel free to round up to $1 million of new insurance. The cost increase over $750k should be minimal.
This is a pretty good rationalization. You might want to consider more if your wife would have difficulty working and taking care of the kids without you. My wife and I decided to get enough where the other person would be able to stop working if they wanted. It will cost us about $7000 extra over the 20 year term, doesn't seem like that big of a deal.

DesertGator
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Re: How much term life insurance do I need?

Post by DesertGator » Thu Feb 13, 2020 7:10 pm

-9 years to go on a $300K policy
Please tell me you don't have a whole life policy. If so, I suggest reading this:
https://www.whitecoatinvestor.com/what- ... insurance/

psy1
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Re: How much term life insurance do I need?

Post by psy1 » Thu Feb 13, 2020 8:34 pm

Maybe I am crazy, but I think you need quite a bit of term insurance. Not sure why you don't list your age which is one of the most important variables but assuming you are ~40, you could get a minimum of 10 year and better 20 year term insurance.

You make $110K. How much would it cost to replace your income so your family could survive in place without you? You have $330K in mortgage debt. You have 3 kids who will be in college before you know it. At state colleges, the average student graduates in 5-6 years so you are looking at as much as 15 years of college which costs ~$25,000 per year. That is another $375,000 assuming zero inflation. I got into this on another post - yes, your kids can work, your wife can earn more money/get a second job/marry a rich guy/win the lottery - but the question as I see it is how much insurance would replace your income so that your family could thrive in your absence.

So for mortgage and college your wife would need ~$700,000 cash. Plus a sufficient sum to replace your $110,000 annual income. I would consider the previous recommendation of $1 million a minimum.

lessismore22
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Location: USA

Re: How much term life insurance do I need?

Post by lessismore22 » Thu Feb 13, 2020 10:24 pm

davebo wrote:
Thu Feb 13, 2020 4:04 pm
Married, 3 kids (11, 10, and 8)
529 Savings: $160K
Retirement: $750K plus my wife has 18 years in a teacher pension
Liquid: Roughly $140K
My income: $110K
Wife's Income: $80K
Existing Life Insurance:
-9 years to go on a $300K policy
-3x salary through work ($300K)
-Mortgage for $330K is our only debt.

How much would you get in this case?
Assuming you're 40ish. If you died today your wife would have a paid off house, 750k retirement, 410k liquid, 160k 529, a pension, and 80k yearly income. Is there an unknown expense we're not seeing that you're trying to cover?

BruDude
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Re: How much term life insurance do I need?

Post by BruDude » Thu Feb 13, 2020 11:40 pm

A lot of assumptions to be made but based off your post I’d say somewhere between $750k-2M. Don’t count the $300k employer coverage. You won’t have it if you change jobs.

Unladen_Swallow
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Re: How much term life insurance do I need?

Post by Unladen_Swallow » Fri Feb 14, 2020 4:15 am

The house is not paid off.
lessismore22 wrote:
Thu Feb 13, 2020 10:24 pm
davebo wrote:
Thu Feb 13, 2020 4:04 pm
Married, 3 kids (11, 10, and 8)
529 Savings: $160K
Retirement: $750K plus my wife has 18 years in a teacher pension
Liquid: Roughly $140K
My income: $110K
Wife's Income: $80K
Existing Life Insurance:
-9 years to go on a $300K policy
-3x salary through work ($300K)
-Mortgage for $330K is our only debt.

How much would you get in this case?
Assuming you're 40ish. If you died today your wife would have a paid off house, 750k retirement, 410k liquid, 160k 529, a pension, and 80k yearly income. Is there an unknown expense we're not seeing that you're trying to cover?
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

Unladen_Swallow
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Re: How much term life insurance do I need?

Post by Unladen_Swallow » Fri Feb 14, 2020 4:21 am

OP,

I wish you had indicated your age. Term insurance goes up steeply with age. I got 15yr term when I was 39. I was fit as a fiddle. It costs me very little. If I tried to get the same at 40, the rates go up substantially at this age.

You have a large mortgage outstanding. And 3 kids. Your work insurance is irrelevant. If you lost your job, you wouldn't have that.

I would get at least a $1M, if not $1.5M. None of it will replace your income, but it will provide a safety net in case the now sole breadwinner (your wife) loses a job or is unable to work for a bit. Your house mortgage would be paid off, and the rest could fund your kids education and provide savings. Then your wife's income would be able to support a family of four and continue saving.

davebo wrote:
Thu Feb 13, 2020 4:04 pm
Married, 3 kids (11, 10, and 8)
529 Savings: $160K
Retirement: $750K plus my wife has 18 years in a teacher pension
Liquid: Roughly $140K
My income: $110K
Wife's Income: $80K
Existing Life Insurance:
-9 years to go on a $300K policy
-3x salary through work ($300K)
-Mortgage for $330K is our only debt.

How much would you get in this case?
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

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Stinky
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Re: How much term life insurance do I need?

Post by Stinky » Fri Feb 14, 2020 5:05 am

Unladen_Swallow wrote:
Fri Feb 14, 2020 4:21 am

I wish you had indicated your age. Term insurance goes up steeply with age. I got 15yr term when I was 39. I was fit as a fiddle. It costs me very little. If I tried to get the same at 40, the rates go up substantially at this age.
Per Zander.com, $1 million of 15 year term, issued to male age 39, preferred rate class, costs $532 per year. Same policy issued to male age 40 costs $580 per year.

Yes, insurance increases in price as issue age gets older. I’m not sure how that’s relevant to the question asked by OP, which is “how much do I need”.
It's a GREAT day to be alive - Travis Tritt

Triple digit golfer
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Re: How much term life insurance do I need?

Post by Triple digit golfer » Fri Feb 14, 2020 5:38 am

$1 million or more,15 or 20 years.

I want my wife to not have to work if I die.

Unladen_Swallow
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Re: How much term life insurance do I need?

Post by Unladen_Swallow » Fri Feb 14, 2020 5:45 am

Stinky wrote:
Fri Feb 14, 2020 5:05 am
Unladen_Swallow wrote:
Fri Feb 14, 2020 4:21 am

I wish you had indicated your age. Term insurance goes up steeply with age. I got 15yr term when I was 39. I was fit as a fiddle. It costs me very little. If I tried to get the same at 40, the rates go up substantially at this age.
Per Zander.com, $1 million of 15 year term, issued to male age 39, preferred rate class, costs $532 per year. Same policy issued to male age 40 costs $580 per year.

Yes, insurance increases in price as issue age gets older. I’m not sure how that’s relevant to the question asked by OP, which is “how much do I need”.
You are bothered that I provided a more informative (corrected) answer than you would have?

I haven't checked rates, I am advising based on the advice my agent gave me. If things are different, then I'm sure the OP could have discovered it. And if you do intend to argue, perhaps your answer should include the difference in rates between 38 and 39, and 39 and 40. And all the various classes as well.
Last edited by Unladen_Swallow on Fri Feb 14, 2020 11:30 am, edited 1 time in total.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

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mmmodem
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Re: How much term life insurance do I need?

Post by mmmodem » Fri Feb 14, 2020 8:04 am

If you lost your job today and passed away tomorrow, your family would have roughly $1M in assets and a paid off home with an $80k job. Is this enough for your family? In 9 years, will you be able to self insure? If the answer is yes to both questions, you have enough term life. Only you can answer this question.

For my family, absolutely this is enough because our expenses are around <$30k a year anyway with a paid off home. She wouldn't need to work at all with $1M. 9 years later we'd be able to self insure. And she intends to continue to work.

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Stinky
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Re: How much term life insurance do I need?

Post by Stinky » Fri Feb 14, 2020 8:48 am

Unladen_Swallow wrote:
Fri Feb 14, 2020 5:45 am

You are bothered that I provided a more uninformative answer than you would have?

I haven't checked rates, I am advising based on the advice my agent gave me. If things are different, then I'm sure the OP could have discovered it. And if you do intend to argue, perhaps your answer should include the difference in rates between 38 and 39, and 39 and 40. And all the various classes as well.
Sorry that your agent gave you inaccurate information.

If providing correct information is “arguing”, then I stand guilty as charged.

Zander.com is a great source for rates from a broad range of quality companies, and can give quotes for all ages, risk classes, and face amounts. I’ve bought several policies through Zander, and highly recommend them.

[OT comment removed by admin LadyGeek]
It's a GREAT day to be alive - Travis Tritt

Caduceus
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Re: How much term life insurance do I need?

Post by Caduceus » Fri Feb 14, 2020 10:47 am

Don't see why you need any or much more term life. If anything happened to you, you'd have a paid off house and your partner would be fine with that level of assets. Retirement assets supposed to be spent between the both of you now belong to your partner entirely. If you are really worried, maybe $500,000: $300,000 to cover the residual mortgage (if you lose that when you switch jobs) and $200,000 for the kids to get them started in life when they graduate from college.

I don't know how people are getting to numbers like 2 million more in term life.

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greg24
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Re: How much term life insurance do I need?

Post by greg24 » Fri Feb 14, 2020 10:55 am

Age is a big factor. I have found that term life into your early 50s is reasonable, but once it has to cover late 50s to early 60s, it really spikes. As morbidity spikes at those ages.

Depending on your age, you may want to consider a 10-year term. You are in a good financial position now, and will likely be in a stronger one 10 years from now.

A $500k or $1M 10-year policy would give more peace of mind without a large premium.

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Darth Xanadu
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Re: How much term life insurance do I need?

Post by Darth Xanadu » Fri Feb 14, 2020 11:01 am

You may also want to check to see if and how much money Social Security would pay in the event of your death, or your spouse's death (spouse may not be paying into SS if in teaching).
"A courageous teacher, failure is."

Triple digit golfer
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Re: How much term life insurance do I need?

Post by Triple digit golfer » Fri Feb 14, 2020 11:10 am

You've now gotten recommendations for $0 additional all the way up to $2 million.

What will you do?

Obviously, it's very personal.

I would not want my wife to even have to think about working if I die. We have a toddler and I would want her to be there for our child as much as she can, without the stress of working and juggling things.

We can certainly afford the life insurance premiums to have $2 million in coverage for me. So that's what we have. It's less than $100 per month for a $1 million 30 year policy and $1 million 20 year policy. That, along with our $800k retirement portfolio and a $300k mortgage, would give her around $2.5 million without a mortgage payment if I die. She would be comfortable, but certainly not lavishly wealthy. Probably move into a smaller and less expensive home to maintain, maybe a townhouse. Bottom line, she'll have flexibility and a lot to deal with, and money is one thing that I can make sure that she won't have to worry about with all the added stress that would come with such a situation.

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BolderBoy
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Re: How much term life insurance do I need?

Post by BolderBoy » Fri Feb 14, 2020 11:19 am

psy1 wrote:
Thu Feb 13, 2020 8:34 pm
Maybe I am crazy, but I think you need quite a bit of term insurance. Not sure why you don't list your age which is one of the most important variables but assuming you are ~40, you could get a minimum of 10 year and better 20 year term insurance.
I agree with this. You are probably under insured for your circumstances.

How old are you?
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

Unladen_Swallow
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Re: How much term life insurance do I need?

Post by Unladen_Swallow » Fri Feb 14, 2020 11:36 am

Stinky wrote:
Fri Feb 14, 2020 8:48 am
Unladen_Swallow wrote:
Fri Feb 14, 2020 5:45 am

You are bothered that I provided a more uninformative answer than you would have?

I haven't checked rates, I am advising based on the advice my agent gave me. If things are different, then I'm sure the OP could have discovered it. And if you do intend to argue, perhaps your answer should include the difference in rates between 38 and 39, and 39 and 40. And all the various classes as well.
Sorry that your agent gave you inaccurate information.

If providing correct information is “arguing”, then I stand guilty as charged.

Zander.com is a great source for rates from a broad range of quality companies, and can give quotes for all ages, risk classes, and face amounts. I’ve bought several policies through Zander, and highly recommend them.

[OT comment removed by admin LadyGeek]
I corrected my post...I meant to use the word more "informative ".

Anyway, OP asked for how much term to get. I answered that. Everything I wrote beyond that is additional information. If you wanted to provide clarification on the additional information, then that would be great and useful. [OT comment removed by admin LadyGeek]
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

Topic Author
davebo
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Re: How much term life insurance do I need?

Post by davebo » Fri Feb 14, 2020 1:01 pm

Sorry everyone, I'm 41! Thought I had included that one.

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Stinky
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Re: How much term life insurance do I need?

Post by Stinky » Sun Feb 16, 2020 9:32 am

davebo wrote:
Fri Feb 14, 2020 1:01 pm
Sorry everyone, I'm 41! Thought I had included that one.
Davebo, just curious if you’ve decided what you’ll do.

Please post if you’d like more input from folks on the Forum.
It's a GREAT day to be alive - Travis Tritt

aerosurfer
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Re: How much term life insurance do I need?

Post by aerosurfer » Sun Feb 16, 2020 9:57 am

Other question, I'm not sure is implied or not, I haven't seen anyone else asking.. what happens if SHE dies?

How much is on her policy? Can YOU work and raise your kids on 110k? Would you have access to her pension or any life insurance through the teachers unions/associations? Would you have to change jobs to raise your kids or take in aupair?

I really dont understand the sentiment about a spouse never having to work again if I pass. Still need to have medical for her and the kids. She will have a life to live afterwards, as will you. Our accumulation years also happen to be prime social years, now with the money to afford nicer things. Raising the kids is a full time job, but you still have to have a social and support life. Not working indefinitely does not seem to be the ideal plan.

On another thread about life someone said

"You want enough life insurance to cover expenses, but not too much that her new husband doesnt have to work"

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davebo
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Re: How much term life insurance do I need?

Post by davebo » Mon Feb 17, 2020 1:07 pm

Stinky wrote:
Sun Feb 16, 2020 9:32 am
davebo wrote:
Fri Feb 14, 2020 1:01 pm
Sorry everyone, I'm 41! Thought I had included that one.
Davebo, just curious if you’ve decided what you’ll do.

Please post if you’d like more input from folks on the Forum.
I applied for $1M on myself (20 year) and $500K on my wife (20 year). I might opt to reduce it, but they said to overestimate and then reduce because you'll have to go through underwriting again if we choose to increase it.

I think it's probably overkill to be honest, but I know that I can cancel my existing $300K policy, cut back on work life insurance, and potentially reduce this policy if I wanted to. I figure I should probably get it now and be done with it, actually though, I probably should've gotten it a few years back. Oh well.

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Stinky
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Re: How much term life insurance do I need?

Post by Stinky » Mon Feb 17, 2020 1:11 pm

davebo wrote:
Mon Feb 17, 2020 1:07 pm
Stinky wrote:
Sun Feb 16, 2020 9:32 am
davebo wrote:
Fri Feb 14, 2020 1:01 pm
Sorry everyone, I'm 41! Thought I had included that one.
Davebo, just curious if you’ve decided what you’ll do.

Please post if you’d like more input from folks on the Forum.
I applied for $1M on myself (20 year) and $500K on my wife (20 year). I might opt to reduce it, but they said to overestimate and then reduce because you'll have to go through underwriting again if we choose to increase it.

I think it's probably overkill to be honest, but I know that I can cancel my existing $300K policy, cut back on work life insurance, and potentially reduce this policy if I wanted to. I figure I should probably get it now and be done with it, actually though, I probably should've gotten it a few years back. Oh well.
Excellent!

Congratulations. Hope that it all works out for you.
It's a GREAT day to be alive - Travis Tritt

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davebo
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Re: How much term life insurance do I need?

Post by davebo » Mon Feb 17, 2020 1:12 pm

aerosurfer wrote:
Sun Feb 16, 2020 9:57 am
Other question, I'm not sure is implied or not, I haven't seen anyone else asking.. what happens if SHE dies?

How much is on her policy? Can YOU work and raise your kids on 110k? Would you have access to her pension or any life insurance through the teachers unions/associations? Would you have to change jobs to raise your kids or take in aupair?

I really dont understand the sentiment about a spouse never having to work again if I pass. Still need to have medical for her and the kids. She will have a life to live afterwards, as will you. Our accumulation years also happen to be prime social years, now with the money to afford nicer things. Raising the kids is a full time job, but you still have to have a social and support life. Not working indefinitely does not seem to be the ideal plan.

On another thread about life someone said

"You want enough life insurance to cover expenses, but not too much that her new husband doesnt have to work"
Yeah, she'll have $300K on her for another 10 years and we're taking out $500K. Honestly don't know about the benefits on teh pension, but there is probably something there.

I had the same thought about the spouse not working. Maybe it has to do with so many people buying life insurance when they are 30 (newborns) as opposed to 41 (my age). I guess at that point you wouldn't want your wife to work. We have family near and my kids are in school all day, realistically my wife could go back to work without having to find someone to take care of the kids. I would want her to supplement her income, pay for college/weddings, pay off the house, and then have a cushion.

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Re: How much term life insurance do I need?

Post by soccerrules » Mon Feb 17, 2020 1:24 pm

Triple digit golfer wrote:
Fri Feb 14, 2020 5:38 am
$1 million or more,15 or 20 years.

I want my wife to not have to work if I die.
+1
I got a $1M 20 year portable level term that will take me age 72. Here was my reasoning.
1) Relatively cheap @$2K a year.
2) Don't want wife to have to work if i go
3) My kids are older (youngest 18)
4) I have options
a) I can drop it when I retire or reach FI
b) Reduce benefit and cost once youngest is out of college and keep
c) Could adjust benefit,cost, and beneficiaries, kids could get some $$ tax free w/o waiting on wife to pass for inheritance

best of luck
Don't let your outflow exceed your income or your upkeep will be your downfall.

Omalley
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Re: How much term life insurance do I need?

Post by Omalley » Mon Feb 17, 2020 1:41 pm

OP - I know that you already decided to apply for policies totaling $1M (you) and $0.5M (wife), which could be reasonable based on your existing assets. One piece of the puzzle which would help with the analysis is your annual family spending. Can either you or your spouse fund your existing lifestyle and save for retirement/college on the remaining income?

I agree that your potential policies should provide a good backstop for settling the mortgage, as well as future college and retirement spending.

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Re: How much term life insurance do I need?

Post by Valuethinker » Mon Feb 17, 2020 3:57 pm

davebo wrote:
Mon Feb 17, 2020 1:07 pm
Stinky wrote:
Sun Feb 16, 2020 9:32 am
davebo wrote:
Fri Feb 14, 2020 1:01 pm
Sorry everyone, I'm 41! Thought I had included that one.
Davebo, just curious if you’ve decided what you’ll do.

Please post if you’d like more input from folks on the Forum.
I applied for $1M on myself (20 year) and $500K on my wife (20 year). I might opt to reduce it, but they said to overestimate and then reduce because you'll have to go through underwriting again if we choose to increase it.

I think it's probably overkill to be honest, but I know that I can cancel my existing $300K policy, cut back on work life insurance, and potentially reduce this policy if I wanted to. I figure I should probably get it now and be done with it, actually though, I probably should've gotten it a few years back. Oh well.
Do not cancel your existing policies until the legally mandated exclusionary period has passed. This varies by state I believe.

For example if you take out a 1 million dollar policy and die shortly afterwards in an accident the insurance company may allege suicide.

Ditto if you develop a serious form of cancer.

Believe me you do not want them to have any wriggle room. Because for a 6 to 7 figure sum they have the incentive to find it.

Live overinsured for a couple of years.

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Artful Dodger
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Re: How much term life insurance do I need?

Post by Artful Dodger » Mon Feb 17, 2020 5:34 pm

davebo wrote:
Mon Feb 17, 2020 1:07 pm
Stinky wrote:
Sun Feb 16, 2020 9:32 am
davebo wrote:
Fri Feb 14, 2020 1:01 pm
Sorry everyone, I'm 41! Thought I had included that one.
Davebo, just curious if you’ve decided what you’ll do.

Please post if you’d like more input from folks on the Forum.
I applied for $1M on myself (20 year) and $500K on my wife (20 year). I might opt to reduce it, but they said to overestimate and then reduce because you'll have to go through underwriting again if we choose to increase it.

I think it's probably overkill to be honest, but I know that I can cancel my existing $300K policy, cut back on work life insurance, and potentially reduce this policy if I wanted to. I figure I should probably get it now and be done with it, actually though, I probably should've gotten it a few years back. Oh well.
You said you had a $300k employer based policy. Is this all provided by your employer, or is some of it supplemental term? If it is supplemental, you might take a look at the premium schedule. Most of these plans increase at 5 year intervals, and as you age tend to be uncompetitive with the type of rate you'll get when buying a large face amount personal policy for an extended term. So, you could cancel this policy when you add the new $1M plan you're considering.

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Re: How much term life insurance do I need?

Post by LadyGeek » Mon Feb 17, 2020 6:58 pm

I removed some earlier comments that were getting contentious. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

...At all times we must conduct ourselves in a respectful manner to other posters.
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davebo
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Re: How much term life insurance do I need?

Post by davebo » Tue Feb 18, 2020 11:41 am

Artful Dodger wrote:
Mon Feb 17, 2020 5:34 pm
davebo wrote:
Mon Feb 17, 2020 1:07 pm
Stinky wrote:
Sun Feb 16, 2020 9:32 am
davebo wrote:
Fri Feb 14, 2020 1:01 pm
Sorry everyone, I'm 41! Thought I had included that one.
Davebo, just curious if you’ve decided what you’ll do.

Please post if you’d like more input from folks on the Forum.
I applied for $1M on myself (20 year) and $500K on my wife (20 year). I might opt to reduce it, but they said to overestimate and then reduce because you'll have to go through underwriting again if we choose to increase it.

I think it's probably overkill to be honest, but I know that I can cancel my existing $300K policy, cut back on work life insurance, and potentially reduce this policy if I wanted to. I figure I should probably get it now and be done with it, actually though, I probably should've gotten it a few years back. Oh well.
You said you had a $300k employer based policy. Is this all provided by your employer, or is some of it supplemental term? If it is supplemental, you might take a look at the premium schedule. Most of these plans increase at 5 year intervals, and as you age tend to be uncompetitive with the type of rate you'll get when buying a large face amount personal policy for an extended term. So, you could cancel this policy when you add the new $1M plan you're considering.
I don't know what it's considered. Every year at enrollment time, you can choose your coverage. Employer provides 1x salary and then you can go up to 2x or 3x and pay a bit more. I would expect it would increase as I got older and, I agree, I probably would just opt for the free 1x salary life insurance.

NoProbLlama
Posts: 29
Joined: Sat Jan 26, 2019 10:40 am

Re: How much term life insurance do I need?

Post by NoProbLlama » Tue Feb 18, 2020 11:53 am

davebo wrote:
Mon Feb 17, 2020 1:07 pm
Stinky wrote:
Sun Feb 16, 2020 9:32 am
davebo wrote:
Fri Feb 14, 2020 1:01 pm
Sorry everyone, I'm 41! Thought I had included that one.
Davebo, just curious if you’ve decided what you’ll do.

Please post if you’d like more input from folks on the Forum.
I applied for $1M on myself (20 year) and $500K on my wife (20 year). I might opt to reduce it, but they said to overestimate and then reduce because you'll have to go through underwriting again if we choose to increase it.

I think it's probably overkill to be honest, but I know that I can cancel my existing $300K policy, cut back on work life insurance, and potentially reduce this policy if I wanted to. I figure I should probably get it now and be done with it, actually though, I probably should've gotten it a few years back. Oh well.
The comment about underwriting requirements above is correct, and it was the right move. It sounds like your broker/agent is on top of the ball here, but I'll add one more consideration around decreasing these amounts. Some companies use per-unit rates & policy fee structures that can "scale" in odd ways when changing face amounts (e.g., the premium on $750,000 of coverage will not be 75% of the premium for $1M of coverage).

This is most pronounced in cases where the rates have "volume discounts" at certain coverage break-points & the decreased coverage causes you to cross that breakpoint. As a result, you can sometimes get $1M of coverage for a lower premium than $900k coverage. I believe $1M is a popular benchmark for these, so don't be surprised if you see something similar.

rj342
Posts: 715
Joined: Tue Apr 30, 2019 12:21 pm

Re: How much term life insurance do I need?

Post by rj342 » Tue Feb 18, 2020 12:29 pm

aerosurfer wrote:
Sun Feb 16, 2020 9:57 am
Other question, I'm not sure is implied or not, I haven't seen anyone else asking.. what happens if SHE dies?

How much is on her policy? Can YOU work and raise your kids on 110k? Would you have access to her pension or any life insurance through the teachers unions/associations? Would you have to change jobs to raise your kids or take in aupair?

I really dont understand the sentiment about a spouse never having to work again if I pass. Still need to have medical for her and the kids. She will have a life to live afterwards, as will you. Our accumulation years also happen to be prime social years, now with the money to afford nicer things. Raising the kids is a full time job, but you still have to have a social and support life. Not working indefinitely does not seem to be the ideal plan.

On another thread about life someone said

"You want enough life insurance to cover expenses, but not too much that her new husband doesnt have to work"
LOL. Or put another way, the point is not to play the death lottery so your family will be 'rich' -- it is for some security.

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