life insurance vs. SocSec survivors benefits

[griffin2004]

Has anyone looked at life insurance versus relying on Social Security survivor's benefits to support your kids if you should die when they are minors?

I'm not really good a doing side-by-side numbers comparisons. I suppose life ins PLUS Soc Sec would be optimal, but I really can't afford the life ins right now.

Is Soc Sec survivor's a reasonable stop-gap if I don't have life ins? Or am I deluding myself?

Thanks.

[savithny]

Originally Posted by griffin2004

Has anyone looked at life insurance versus relying on Social Security survivor's benefits to support your kids if you should die when they are minors?

I'm not really good a doing side-by-side numbers comparisons. I suppose life ins PLUS Soc Sec would be optimal, but I really can't afford the life ins right now.

Is Soc Sec survivor's a reasonable stop-gap if I don't have life ins? Or am I deluding myself?

Thanks.

If you or DH gets those Social Security statements, it will tell you what your survivors will get if you die... IIRC it works out to be something like $1400/month

here:
http://www.foreignborn.com/self-help.../6programs.htm

The value of Social Security survivors benefits for an average wage earner who dies and leaves a spouse and two children is equivalent to a $322,000 life Insurance policy. Of course, Social Security benefits are paid monthly and not in a one time payment.

The average monthly payment for a family consisting of a widow(er) with two children is about $1,400 per month. Social Security payments increase based on the annual cost-of-living index -- something few private Insurance plans offer.

What that's saying, I believe, is that for most wage earners, the value of the SS benefits their survivors draw is equal to what you'd get if you had that insurance policy, invested it and then spent it out during a similar amount of time.

However, if you need a lump sum to pay off debts or the mortgage, you cannot do that with SS benefits...

[griffin2004]

wow, thanks for that info! that's really helpful

[lmonter]

Depends. Have you gotten a recent SS benefits statement? They send them out to you every year if you earn SS wages. So hubby gets one, I haven't in a few years. In that statement it'll tell you possible benefits and such, including the death benefit. I believe you can go to SS's website and request your statement (for free) if you haven't gotten one in the last year or so.

Anyway, why I say it depends is when you die. If your benefits would be eligible for survivors, and you died next year, then yeah, they'd probably get something. If you die in 10+ years, um, not so much. I'd be surprised if SS lasts that long, honestly...

We have life insurance on both hubby and I, and just figure *if* social security comes into play, that's extra money to use for investing or bills or whatever. But we're not counting on it.

[choli]

When my dad died, my mom brought us up on SS. It wasn't by any means enough for a decent life. That kind of poverty is not fun. Get insurance.

[wednesday]

We have life insurance, but I definitely considered the value of our estimated SS benefits when determining how much insurance to purchase. DH and I both have $300K policies. We were pressured to buy a LOT more, but, we are already paying over $100/month in premiums, and when I looked at our SS estimates I found that the benefits (at least in our case) are fairly substantial. If DH died, I would begin receiving over $2K/month in SS. One of our most substantial bills, his student loan, would be cancelled (many people are not aware of this, in fact even the USAA rep wanted to include this student loan balance into our life ins "needs"). Since I am already a WOHM, I don't look at life ins. as a windfall that would allow me to never work again. Maybe people who are much higher income do look at it that way, especially if the high earner should die and the partner has been a SAHP. But I would expect to pretty much keep our current lifestyle. Out of the $300K benefit, I'd pay off our mortgage (about $100K) and invest the rest to supplement my earned income and the SS benefits.

[Pancakes]

Originally Posted by lmonter

We have life insurance on both hubby and I, and just figure *if* social security comes into play, that's extra money to use for investing or bills or whatever. But we're not counting on it.

Same here.

[Belleweather]

Also, remember that there are issues with the stability of funding for the social security program, which means that benefits could be cut or could not increase at the rate of inflation in the future -- in fact, a lot of people think that's likely. So depending on Social Security to raise your kids means your ability to provide for your kids rests in the hands of politicians who are getting increasingly worried about the costs of social security.