Life Insurance, how much do I need?

[goldingoddess]

I'm finally ready to take out life insurance on my husband

I'm unsure of how much to take out, I did an online calculator and it said I needed 1 million for hubby, and that just isn't going to happen. Hubby is primary breadwinner and we have a 250,000 mortgage. I make less than 12k a year, but would sell and move to a much lower cost of living area should anything ever happen.

I can get 250K of coverage for 25/month through USAA or 100k for 17/month, is this reasonable?

What do you have, what do you pay?

[Jayray]

I have heard people say take out as much as you can afford. I wanted to have enough to pay off a mortgage (if we had one), to pay off whatever debt we might have (student loans, etc.) and to live for a few years if I didn't have a job. (I have a job right now, but as we have more kids that might change). So we have $500,000 on DH and $250,000 on me. I considered lowering the payout on DH's to lower the premium a little, but was advised against it. If the worst happens, you want to not have to worry.

DH's is $253 for the year and mine is $101 for the year. We have a policy that is renewable to age 80, so the premiums go up a bit about every 5 years. It's through Northwestern Mutual.

For fixed term (20 year) the premiums would have been $340/year for DH and $225/year for me.

[Nutter]

DH & I each have a policy that would be enough to cover our mortgage, all debts, funeral expenses & about 2 years of wages. That way if the unthinkable happened, we would have a couple years to pick up the pieces without worrying about finances. I think we pay between $20 & $30/mo each for the policies.

It is important for SAHM's to have life insurance as well, because if Mom is suddenly gone, Dad will still need to be working to keep a roof over the family and bread on the table - - but child & home care can suddenly become huge expenses.

[goldingoddess]

Originally Posted by Jayray

DH's is $253 for the year and mine is $101 for the year. We have a policy that is renewable to age 80, so the premiums go up a bit about every 5 years. It's through Northwestern Mutual.

For fixed term (20 year) the premiums would have been $340/year for DH and $225/year for me.

Sorry what is the difference between what you have and fixed term?

[Jayray]

What we have is not fixed term. It's renewable until we're 80 years old. But that means the premium isn't fixed either--it increases over the years.

The fixed is for a certain amount of time--most only 10 or 20 years. And the premium is the same for that entire time. It never goes up.

[lmonter]

Unless you can amp up your earning ability (with kiddo in tow!), I'd go up to $500K if you can swing that. If he smokes or has other hereditary/health issues that would make the premium go up a bit...

We have $500K on hubby, $350K on me, and it's a 20-year term. Our rates won't go up until that 20-year mark. Hopefully by then we'll be self-insured to some degree, but even then the renewal rate sheet we got doesn't have the amounts going up *that* much.

[samandhenrysmom]

Our financial counselor (a Dave Ramsey trained guy) recommended one million ofr each of us but that was cost prohibitive. We have $500,000 for each. It level term for 30 years and our premiums are a little over $100 each per month - we are in our forties so it is much more expensive.

[Jane91]

We have $1,000,000 each and are in our very late thirties. My costs about $400 per year, my husband's is $1200 for a 20 year fixed. We are looking at updating our policies to be 25 or 30 year fixed.

Our girls are less than a year old, and I wanted there to be enough to provide the lifestyle that we would have provided if we had both lived ideally (extra-curriculars, travel, college, support getting on their feet/starting their first job, contributions to weddings and first homes) and to ensure they are not a financial liability for their guardians if both of us were to pass.

Having the policies is really a tremendous comfort -- it allows me to rest easy at night knowing that there is enough $$$ to provide for the girls.

[frugalmum]

I have never worked. I am insured for $500,000 and DH is insured for $2million. He also has disability insurance.

[zebra15]

Originally Posted by goldingoddess

I'm finally ready to take out life insurance on my husband

I'm unsure of how much to take out, I did an online calculator and it said I needed 1 million for hubby, and that just isn't going to happen. Hubby is primary breadwinner and we have a 250,000 mortgage. I make less than 12k a year, but would sell and move to a much lower cost of living area should anything ever happen.

I can get 250K of coverage for 25/month through USAA or 100k for 17/month, is this reasonable?

What do you have, what do you pay?

This USAA plan is very reasonable and I would jump on it. I would call them to verify the terms, I believe its a short term plan. (if its the same plan I have it goes for 7 years - I think, then has the ability to convert to something else). USAA has a financial planning division and the reps have been wonderful everytime I've needed something.
Does your DH have an insurance option availabe thru his payroll/work?

[rightkindofme]

We have a million on Noah. Because of his fatty liver (our insurance salesman was making fun of him for being such a drinker... nope... that's diet for him) we pay $1200/year. That would be enough to pay off the house and let me be ok for several years without working but it wouldn't set me up for life around here.

[sewaneecook]

One rule of thumb I've heard is to take out 10x your annual salary so that you could invest it, earn around 10% and live off the interest if needed.

We took that in to account and added a bit to pay off the mortgage, and the added expenses when one parent is gone and DH has 1 million ($400/year cost) and I have 500,000 ($500/year because I have asthma) policy.

Good for you for getting a necessary, but often overlooked, insurance policy.

[cristeen]

We have 2x the mortgage on each of us. Thats enough to pay off the house and let us live for at least 5 yrs very frugally in this area. Without the mtg payment, our bills would be good just w a pt job or even taking in a tenant (i know not an option for you).

I actually use an agent for life insurance, we're paying about $100/mo for 4 policies ($250k each), and we're older than you guys. We only have 20 yr term, figuring that in 20 yrs time we wontneed to worry about supporting A anymore, the house will be mostly paid off, etc.

[russsk]

We have about 750k for dh and 250k for me. I don't think this is nearly enough, but it's what we can afford right now.

[sunnysandiegan]

We think differently about insurance (any of it) than other people do. A lot differently from what I read and I'm not going to get into the differences here. Feel free to PM me, though. We have one level term life policy on DH for the amount of our mortgage (rounded up) from when we first became parents, which would now cover the mortgage and 2-4 years of expenses. We also have an AD&D policy on DH for the mortgage amount (rounded down). Those cost us $25/month and the AD&D policy is fairly new (as of early 2010) because the other one will expire soon. In addition, we have a complimentary policy on me through our credit union (and another policy somewhere that is also free, but I have to dig up the details). These meet our needs and philosophy quite well.