Life Insurance

[FnkyGreenMama]

I am wondering if anyone has any advice or experience to share about life insurance? DH and I are trying to figure out what type, how much, etc. He has a current $50K policy which we know is not adequate now that we have a family, and I have 3x my salary with my current employer (very stable but I would lose it if I choose to move, which is a possibility in the next 10-15 years). We're looking at numbers and the online calculators and DH thinks the suggested numbers we are coming across are way too high (like $400K each) and too expensive for something that "probably won't happen" while I think that those numbers might be realistic. Term v.s. fixed? Universal? This is confusing ... TIA for any advice!

[pbjmama]

There are alot of factors at play here. I'm learning about this right now as we are going through it too.

For our situation, I'm 30 and dh is 35. We have two preschool children, I sah and have a bs and dh works full time and has a ma. If dh was to die tomorrow I would have a funeral to pay for (guessing 10k), debts to settle (around 10k including our car and my student loans) oh and dh's student loans (15k), sell our house and move (to be near family), would want to buy a new house (~150k). So that is about 200k off the top. Then I have to decide if I would go back to school (who knows how much $) or stay home until my kids are school age. If I stay at home we also need medical insurance. If I go back to school I also have to pay for childcare. See how quickly this is adding up? I'm willing to invest right now so if the highly unlikely happens I won't have to bust my butt and never see my kids. I want to be able to afford to help them with college, save for retirement, and do some extra things. My dh is in great health and we got good rates so that helps.

For my policy we decided on a lesser amount because there is not as much potential for lost income. Dh has a great job that includes all the benefits and I have a much smaller student loan. His income would not stop if I died, health insurance would still be in place. He would have to pay for childcare for at least a few years. It is enough that he wouldn't have to worry about helping with college costs or retirement.

We have/are getting 20 year term policies. Our kids should be out of college by then if they follow a traditional path. Once they are adults our outflow changes alot and we hope to have much more savings by then that would help cover us. Right now we have very little savings. We still plan to have life insurance when we are older but it will be much less and only to cover death and maybe mortgage if we have one.

I hope this helps! Actually writing down the #s helped me alot as I was in your position and my dh would have agreed with your dh.

[Belia]

DH and I just got life insurance within the last month.

We followed Dave Ramsey's guidelines. Absolutely NO whole life policies- they're a rip off. Get "level term" life insurance only. That means that your premiums will stay exactly the same for the entire length of the policy. Get a long enough term to see your kids through to young adulthood- 20 years is standard. The guideline is to get a policy worth 8 - 10 times your income. You can approximate how much you would need to cover a SAHM.

We went through Zander Insurance and are pretty happy with how it went (although it's not like we have anything to compare it to!). Enter some basic demographic info online and they will instantly give you 20+ quotes from different companies so you can see how much money you're talking about. Customer service was pretty good- I called them several times at the beginning of the process because I had so many questions and they were very helpful and accessible.

I was not expecting the underwriting process to be so rigorous, but it was. A med tech actually came to our house and drew blood, took urine, etc etc etc. It took a couple of months to get our final policy from the first time we applied. They asked 2 of my doctors for copies of all of my records. It was pretty invasive. I ended up paying a lot more than my estimate because of misc med issues, that I thought were minor but really affected my rates. Zander was really great about keeping me informed, though, and with their application process NOTHING is set in stone until you sign the final paperwork. So I had nothing to lose by seeing the process through to the end.

All in all, I am SO GLAD we have that out of the way. It was really shocking to realize how underinsured we were now that we have a son. Seriously- go ahead and apply and see how it turns out. If you don't like what you see after all of the application and underwriting, just refuse the policy. No harm, no foul, but at least you'd know exactly where you stood.

[MommyDOK]

agree w/ pp.

Now is a great time to get life insurance. Bc there are so many companies out there, they are all competing for your business and rates are competitive. Whole life is only good if you are really rich and are maxed out in all your 401k, ira's and things like that. Life insurance is not taxed (unless your employer pays for it), so that is why it is good for really rich people. I am not in that category so got term.

I am a sahm and want to be able to sahm until all my children are in school. So that is what we figured. I probably could have gotten a little more (got 350k), but hopefully inflation won't skyrocket (yeah, right), and I'll be able to make it until all are in school.

I went through selectquote and they gave me a good deal. Actually lower than what I had when my first dd was born.

The tests are invasive--aids, cholesterol, complete family and medical history. Do not lie bc they will find out bc you release them to get every record from your physician. They are giving you a lot of money---they need to know you are an insurable risk! So if you are on medications, have high cholesterol, anti-depressants, been treated for various things, smoker etc, it will bump you into a different category. I think ultra preferred is the best, but neither dh nor I qualified for that and I still got a good deal.


the only time I've ever worrried about dying, or dh dying, is the time between the application and acceptance. Funny how the brain works! Keep us posted.

[iowaorganic]

We have gone through our life insurance needs as well. You need more than you think. I have a tiny whole life that also carries over coverage to my children and it is cheap since I took it out when I was 20. DH also has a medium sized whole life that he took out when he was 20. So our kids can afford to bury us (which is definitely something I don't want to burden them with- my gma has no life insurance and my dad worries all the time about how to scrape up 10K for a funeral). We also have very sizable 30 year term policies. If DH dies I can still (frugally) buy a home and stay at home with my kids probably until high school or college. If I die- he could pay out for ever service I provide our business and family. One thing we did do is we pay 30% extra and will get all of our money back at the end of the 30 years. I know this seems like a bad idea since we aren't being paid any interest. But I ran the numbers and had my sister run them and we would have to be making much more in interest than our investments have previously made to make this a bad idea. So in roughly 26 years we will get a big check for all that money back. I know it won't have the same purchasing power... but still something to think about when intrest rates are low.

[FnkyGreenMama]

Thanks, everyone!

Originally Posted by pbjmama

I hope this helps! Actually writing down the #s helped me alot as I was in your position and my dh would have agreed with your dh.

Yes, thank you for sharing. The numbers really do add up, don't they?!

Originally Posted by Belia

Seriously- go ahead and apply and see how it turns out. If you don't like what you see after all of the application and underwriting, just refuse the policy. No harm, no foul, but at least you'd know exactly where you stood.

Thanks, Belia, for the advice. Not sure if that company has services here in Canada, but I will check

Originally Posted by MommyDOK

agree w/ pp.
the only time I've ever worrried about dying, or dh dying, is the time between the application and acceptance. Funny how the brain works! Keep us posted.

Seriously, now I am thinking about this so much and I'm feeling like we need to move quickly just in case. Hadn't given much thought to these things before now

Originally Posted by iowaorganic

So in roughly 26 years we will get a big check for all that money back. I know it won't have the same purchasing power... but still something to think about when intrest rates are low.

That is interesting. Sounds a bit like the plan DH has right now, but for 50K.

I'm still feeling a bit overwhelmed, but your responses have helped put some perspective on this, so thanks again!

[MyTwoAs]

I agree with a pp's recommendation for fixed level term insurance. Whole life costs more and the rate of return for the cash-value "investment" is paltry.

Here's an example:

Whole life policy = $100/mo
Term life policy = $10/mo

The whole life policy earns interest and has cash value so it is more per month. However, if you buy a term life policy and then invest the $90 difference yourself, you will earn more in a mutual fund investment of that $90 than the whole life investment will earn. Here's a link with more information: http://www.smartmoney.com/personal-f...ole-life-8011/

[dex_millie]

We did the term insurance and it is very affordable for us. We are doing it for 20years but I think we should do 30. We pay annually for DH which is around 230 and we have 400K on DH for the next 20 years and monthly for me which is $17 a month.

[sunflower.mama]

Originally Posted by dex_millie

We did the term insurance and it is very affordable for us. We are doing it for 20years but I think we should do 30. We pay annually for DH which is around 230 and we have 400K on DH for the next 20 years and monthly for me which is $17 a month.

Whoa - those are great rates. We changed policies to up it/save $ and we're paying $140 total a month for both of us (I forget the breakdown). We have new 25 year policies (to get the new baby through college) $600K for me $750K for him. Granted we're 35 and 36 but still. Those are low rates!!!

[pbjmama]

Did anyone do the childrens rider on insurance? I'm a little confused about what I should do.

[sunflower.mama]

Originally Posted by pbjmama

Did anyone do the childrens rider on insurance? I'm a little confused about what I should do.

Don't know what that is, but I think life insurance for kids is a bit of a scam. The odds are so low that your child would die and you'd need $ to bury them. I think it's a sentimental play on parent's emotions. (But perhaps that's not what a children's rider is???)

[pbjmama]

Originally Posted by sunflower.mama

Don't know what that is, but I think life insurance for kids is a bit of a scam. The odds are so low that your child would die and you'd need $ to bury them. I think it's a sentimental play on parent's emotions. (But perhaps that's not what a children's rider is???)

You were right, it is a 10k policy on both kids. It is $6 a month for both of them and any future children. I agree it is unlikely. It would be about $1400 for 20 years. I had it set that we were not going to do it and I was talking to my mom about it and she thought we should do it. Maybe I just need to tune her out