Considering term life insurance to mitigate widow/widower risks

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B4Xt3r
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Considering term life insurance to mitigate widow/widower risks

Post by B4Xt3r » Mon Sep 09, 2019 6:31 am

Hi All,

I'm considering term life insurance for both my wife and I to mitigate the costs associated should one of us become a widow/widower. My thinking so far is:
  • the term would be set as to get the last child to 16 (so likely around 20 years).
  • for non-primary breadwinner's policy, the amount would be set to cover childcare costs
  • for primary breadwinner's policy, the amount would be set to cover childcare costs & some supplemental income (non-primary breadwinner would need to switch and work some)
From those who have walked these roads before, what other issues should I be thinking through?

Thanks!

-b4xt3r

ivk5
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Re: Considering term life insurance to mitigate widow/widower risks

Post by ivk5 » Mon Sep 09, 2019 6:43 am

Lots written on this topic here including some active threads. Maybe read those first and see if you have more specific questions?

stan1
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Re: Considering term life insurance to mitigate widow/widower risks

Post by stan1 » Mon Sep 09, 2019 6:57 am

If you can both get rated in a low cost risk pool now after medical exams I'd go ahead and buy somewhat more insurance than you think you need and for a longer term. You haven't given any numbers so can only speak in concept. Some people would want the policy to help cover college education costs. If youngest child turns 16 and you don't think you need to continue life insurance any more you can just stop making payments. If you decide in 10 years you want more insurance you might have acquired a medical condition that would make it much more expensive or impossible to get. Term insurance for young, healthy people is still relatively low cost as a percentage of a high earner's annual income.

HomeStretch
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Re: Considering term life insurance to mitigate widow/widower risks

Post by HomeStretch » Mon Sep 09, 2019 7:00 am

Agree there are many posts on this topic which may be helpful.

Suggest a longer term until kids are self sufficient which for us meant after college.

Suggest a larger policy amount. We covered mortgage balance, college costs, extra childcare costs, loss of income (to pay living expenses and fund retirement), and a bit more in case the sole breadwinner ever faced unemployment.

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RickBoglehead
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Re: Considering term life insurance to mitigate widow/widower risks

Post by RickBoglehead » Mon Sep 09, 2019 7:06 am

Many threads on this as stated, also sites that focus specifically on term life information.

You're on the right track, but make sure you're taking everything into account:

- how would college tuition be impacting if one or both were to pass?
- are you insuring for both passing at the same time?
- insurance is to handle expenses you cannot. If lower/non-earning spouse passed, could primary breadwinner handle?

I can tell you that we never insured DW, only myself. Policy set to expire after 20 years as we approach retirement.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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Stinky
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Re: Considering term life insurance to mitigate widow/widower risks

Post by Stinky » Mon Sep 09, 2019 8:17 am

HomeStretch wrote:
Mon Sep 09, 2019 7:00 am
Agree there are many posts on this topic which may be helpful.

Suggest a longer term until kids are self sufficient which for us meant after college.

Suggest a larger policy amount. We covered mortgage balance, college costs, extra childcare costs, loss of income (to pay living expenses and fund retirement), and a bit more in case the sole breadwinner ever faced unemployment.
agree on both longer term and larger policy amount, at least for breadwinner.

Go to Zander.com or term4sale.com for quotes.

And check out other threads on the Forum. There may be a half-dozen each week on term insurance.
It's a GREAT day to be alive - Travis Tritt

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Watty
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Re: Considering term life insurance to mitigate widow/widower risks

Post by Watty » Mon Sep 09, 2019 8:45 am

B4Xt3r wrote:
Mon Sep 09, 2019 6:31 am
for non-primary breadwinner's policy, the amount would be set to cover childcare costs
for primary breadwinner's policy, the amount would be set to cover childcare costs & some supplemental income (non-primary breadwinner would need to switch and work some)
If one of you dies it is possible that there could have be considerable expenses that insurance does not cover if they have a prolonged illness. I can think of two situations where youngish to middle age people were seriously ill for about 5 and 10 years before they died. Even with something like a car accident you could be hurt badly enough that you might need to live in a nursing home, or have in home nursing care, for a while before you finally die.

One expense to also consider is the loss of future retirement savings. If the primary wage earner dies when they are 40 there could be a loss of 25 years of retirement savings. If the surviving spouse earns a lot less then they might be able to get by with their income and a modest life insurance policy but not be able to save much for their eventual retirement.

The survivor will be dealing with a lot of issues with the loss of a spouse, possible long illness of a spouse, and being a single parent. It also possible that their career may suffer so I would cautious about depending a lot on the survivors future income.

It is also possible that the survivor will want to move to be near other family for their support and for help in raising the kids. This is especially true if you moved somewhere for a job and the person with that job dies.

The amount does not need to be like winning the lottery, but you do not want to go on the low side unless that is all you can afford.

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B4Xt3r
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Re: Considering term life insurance to mitigate widow/widower risks

Post by B4Xt3r » Tue Sep 10, 2019 6:49 am

stan1 wrote:
Mon Sep 09, 2019 6:57 am
If you can both get rated in a low cost risk pool now after medical exams I'd go ahead and buy somewhat more insurance than you think you need and for a longer term. You haven't given any numbers so can only speak in concept. Some people would want the policy to help cover college education costs. If youngest child turns 16 and you don't think you need to continue life insurance any more you can just stop making payments. If you decide in 10 years you want more insurance you might have acquired a medical condition that would make it much more expensive or impossible to get. Term insurance for young, healthy people is still relatively low cost as a percentage of a high earner's annual income.
What do you mean by "after medical exams?" Does term life insurance generally require one to disclose a recent medical exam?

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B4Xt3r
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Re: Considering term life insurance to mitigate widow/widower risks

Post by B4Xt3r » Tue Sep 10, 2019 6:50 am

HomeStretch wrote:
Mon Sep 09, 2019 7:00 am
Agree there are many posts on this topic which may be helpful.

Suggest a longer term until kids are self sufficient which for us meant after college.

Suggest a larger policy amount. We covered mortgage balance, college costs, extra childcare costs, loss of income (to pay living expenses and fund retirement), and a bit more in case the sole breadwinner ever faced unemployment.
Ok, so is the general principal to estimate costs you wish covered, and then set the policy amount to be such that if invested conservatively it could likely sustain the estimated costs for the duration desired?

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B4Xt3r
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Re: Considering term life insurance to mitigate widow/widower risks

Post by B4Xt3r » Tue Sep 10, 2019 6:51 am

RickBoglehead wrote:
Mon Sep 09, 2019 7:06 am
Many threads on this as stated, also sites that focus specifically on term life information.

You're on the right track, but make sure you're taking everything into account:

- how would college tuition be impacting if one or both were to pass?
- are you insuring for both passing at the same time?
- insurance is to handle expenses you cannot. If lower/non-earning spouse passed, could primary breadwinner handle?

I can tell you that we never insured DW, only myself. Policy set to expire after 20 years as we approach retirement.
Hadn't considered both passing at the same time, thanks. Feels like I should provide for my kids against such an event.

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B4Xt3r
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Re: Considering term life insurance to mitigate widow/widower risks

Post by B4Xt3r » Tue Sep 10, 2019 6:53 am

Stinky wrote:
Mon Sep 09, 2019 8:17 am
HomeStretch wrote:
Mon Sep 09, 2019 7:00 am
Agree there are many posts on this topic which may be helpful.

Suggest a longer term until kids are self sufficient which for us meant after college.

Suggest a larger policy amount. We covered mortgage balance, college costs, extra childcare costs, loss of income (to pay living expenses and fund retirement), and a bit more in case the sole breadwinner ever faced unemployment.
agree on both longer term and larger policy amount, at least for breadwinner.

Go to Zander.com or term4sale.com for quotes.

And check out other threads on the Forum. There may be a half-dozen each week on term insurance.
Ok, thanks.

Topic Author
B4Xt3r
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Joined: Thu Sep 29, 2016 5:56 am

Re: Considering term life insurance to mitigate widow/widower risks

Post by B4Xt3r » Tue Sep 10, 2019 6:55 am

Watty wrote:
Mon Sep 09, 2019 8:45 am
B4Xt3r wrote:
Mon Sep 09, 2019 6:31 am
for non-primary breadwinner's policy, the amount would be set to cover childcare costs
for primary breadwinner's policy, the amount would be set to cover childcare costs & some supplemental income (non-primary breadwinner would need to switch and work some)
If one of you dies it is possible that there could have be considerable expenses that insurance does not cover if they have a prolonged illness. I can think of two situations where youngish to middle age people were seriously ill for about 5 and 10 years before they died. Even with something like a car accident you could be hurt badly enough that you might need to live in a nursing home, or have in home nursing care, for a while before you finally die.

One expense to also consider is the loss of future retirement savings. If the primary wage earner dies when they are 40 there could be a loss of 25 years of retirement savings. If the surviving spouse earns a lot less then they might be able to get by with their income and a modest life insurance policy but not be able to save much for their eventual retirement.

The survivor will be dealing with a lot of issues with the loss of a spouse, possible long illness of a spouse, and being a single parent. It also possible that their career may suffer so I would cautious about depending a lot on the survivors future income.

It is also possible that the survivor will want to move to be near other family for their support and for help in raising the kids. This is especially true if you moved somewhere for a job and the person with that job dies.

The amount does not need to be like winning the lottery, but you do not want to go on the low side unless that is all you can afford.
Thanks for the input.

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RickBoglehead
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Re: Considering term life insurance to mitigate widow/widower risks

Post by RickBoglehead » Tue Sep 10, 2019 7:02 am

B4Xt3r wrote:
Tue Sep 10, 2019 6:49 am
stan1 wrote:
Mon Sep 09, 2019 6:57 am
If you can both get rated in a low cost risk pool now after medical exams I'd go ahead and buy somewhat more insurance than you think you need and for a longer term. You haven't given any numbers so can only speak in concept. Some people would want the policy to help cover college education costs. If youngest child turns 16 and you don't think you need to continue life insurance any more you can just stop making payments. If you decide in 10 years you want more insurance you might have acquired a medical condition that would make it much more expensive or impossible to get. Term insurance for young, healthy people is still relatively low cost as a percentage of a high earner's annual income.
What do you mean by "after medical exams?" Does term life insurance generally require one to disclose a recent medical exam?
It usually requires you to get a medical exam, often provided free by the insurer. In my case, 20 years ago, they sent a med tech to the home and they did a quick workup. I don't recall if it included a blood test or not. You're not getting the top tier status without an exam.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

stan1
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Joined: Mon Oct 08, 2007 4:35 pm

Re: Considering term life insurance to mitigate widow/widower risks

Post by stan1 » Tue Sep 10, 2019 7:16 am

B4Xt3r wrote:
Tue Sep 10, 2019 6:49 am
stan1 wrote:
Mon Sep 09, 2019 6:57 am
If you can both get rated in a low cost risk pool now after medical exams I'd go ahead and buy somewhat more insurance than you think you need and for a longer term. You haven't given any numbers so can only speak in concept. Some people would want the policy to help cover college education costs. If youngest child turns 16 and you don't think you need to continue life insurance any more you can just stop making payments. If you decide in 10 years you want more insurance you might have acquired a medical condition that would make it much more expensive or impossible to get. Term insurance for young, healthy people is still relatively low cost as a percentage of a high earner's annual income.
What do you mean by "after medical exams?" Does term life insurance generally require one to disclose a recent medical exam?
Yes, buying term insurance on the market is different than most employer group life insurance. The insured (you and spouse in your case) will need to undergo a physical exam usually paid for by the insurer. Any term life insurance that does not involve a medical exam is expensive and probably of a low value. I bought my policy 20 years ago as a healthy person in my early 30s and they sent a nurse to my house to do it. She took vitals (weight, blood pressure) and drew blood for a blood test. A different policy may require a full exam by a physician. You also have to disclose pre-existing conditions and some family history. Based on that you will be assigned into different risk pools that will offer different rates, possibly referred to a higher risk subsidiary, or maybe not offered a policy at all. They will look at weight (BMI), cholesterol, blood pressure, pre-kidney/liver disease indicators. I had to disclose that my father had ALS and grandmother had Alzheimers but still got a good rate so I think there's more weight on vitals than on family history. That's why it makes sense to buy a 20 or 30 year policy in your 30s if healthy before small problems start to creep in during your 40s. There are people on the board who work in insurance sales. One might come along and correct me if there is more current information.

HomeStretch
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Re: Considering term life insurance to mitigate widow/widower risks

Post by HomeStretch » Tue Sep 10, 2019 7:41 am

B4Xt3r wrote:
Tue Sep 10, 2019 6:50 am
HomeStretch wrote:
Mon Sep 09, 2019 7:00 am
Suggest a larger policy amount. We covered mortgage balance, college costs, extra childcare costs, loss of income (to pay living expenses and fund retirement), and a bit more in case the sole breadwinner ever faced unemployment.
Ok, so is the general principal to estimate costs you wish covered, and then set the policy amount to be such that if invested conservatively it could likely sustain the estimated costs for the duration desired?
Not in our case. We estimated our needs as per my post above and obtained policies for that amount.

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