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-   -   Life Insurance or more Investments? (http://www.mothering.com/forum/312-frugality-finances/1216452-life-insurance-more-investments.html)

expat-mama 04-19-2010 07:28 AM

We are expecting our first babe soon and just did a little shuffling around of our finances to take into account that I won't be working for a little (or long) while.

The guy who handles our investments and retirement funds was trying to sell us life insurance. We thought long and hard about, but have (for the most part) decided against it. We make a decent amount and are very frugal and diligent about saving and not acquiring any debt. It just seems like such a scam to me to pay out like 30-40 grand "just in case" one or both of dies in the next 25 years. If we don't die, we get ZIP for that money! It just seems like throwing so much money away.

So we decided it would be wiser to take the money we would pay into life insurance and put into investments that are slighly higher risk/higher gains than our others. We figure at least this way we get SOMETHING back. And the probability of one or both of us dying is pretty low. I'm not a finance person, but isn't it smarter to invest this money than to pay for life insurance that we will probably never need? I mean in terms of risk assessment? (ie: the risk or probability that we would lose the money paid into life insurance because we DON'T die vs. the risk or probability of losing some in a "higher" risk investment)

Our finance guy, trying to convince us, said stuff like, "Well, if one of you dies next year, or even in five years you'd have a million. But if you put that money into investments and took it out if you needed it if one of you died, you wouldn't have anywhere close to that."

I don't want to bet on one of us dying and that's what this feels like. Is that crazy? I don't like fearmongering and I feel like life insurance really preys on our deepest fears... and it works! Now, I find myself questioning our decision but I hate the idea of paying into life insurance.

How did you make this decision?

RunningMomTegan 04-19-2010 07:57 AM

My husband's military, so getting him life insurance was something we feel we HAD to do given his increased risk level. He has a million total, which would let me stay home with kids for at least ten years in the event something happened.

I have $500,000 right now through the military until I get out. When I get out, I'm going to get a policy that is enough to pay off our house and my funeral.

You're overseas, so I don't know how transport of bodies, etc, would work in the vent something happened to one of you. Would your employers cover it?

At the very least, I would consider having a policy to cover funeral costs, etc, if you're not worried about replacing income. A policy that small is pretty cheap!

Good luck making the decision!

velochic 04-19-2010 08:59 AM

I think that a good term life insurance plan is part of a well-rounded and healthy investment portfolio. If you have a family, a life insurance policy, IMO, is one of the most important things to have, in addition to a revocable living trust.

Life insurance isn't a bet on dying. A bet implies that you might not be right. Well, you WILL die. And it can happen at any time. I don't know why death is preying on fears. It's not like you can avoid it.

If you are planning to stay at home, then you absolutely NEED a life insurance policy on your dh.

I agree with the financial planner. He's 100% right, IMO.

SeekingJoy 04-19-2010 10:07 AM

What type of life insurance product(s) is he trying to sell you? Term? Whole life? Carrying a reasonable level of term life insurance (or having adequate investments to support the surviving partner or guardian) shouldn't be that expensive, and I think it the only resposible thing to do once kids are involved.

MeepyCat 04-19-2010 10:27 AM

Where on earth are you getting $30 to $40K quoted as premiums? That seems really high for a million in coverage.

I agree that life insurance is very important for people with children.

TwinMomPlus 04-19-2010 10:47 AM

Quote:
Originally Posted by MeepyCat View Post
Where on earth are you getting $30 to $40K quoted as premiums? That seems really high for a million in coverage.

I agree that life insurance is very important for people with children.
This.

Don't you want money for your children in case something happens to you? Parents die every day, it isn't that far fetched. What if your DH died? You would have to go back to work right away and handle all the bills yourself.

There are much more affordable plans out there.

sunflower.mama 04-19-2010 11:32 AM

I would not feel comfortable without life insurance. Not at all. My mom died when I was 16, so maybe I am biased, but yes, parents die. Kids still need home, school, etc. Even if the mom who stays home dies, you'll need to replace her w/ a housekeeper, nanny, etc. We pay $140 a month for our joint coverage, and yes, I guess that does work out to $42,000 over the 25 year term ($750K on him, $600K on me). But to me it's worth it for peace of mind. I don't think there's a great chance of me being at fault in a car accident or our house burning down either, but I don't sit around and do a cost benefit analysis of whether I should insure those things. I just suck it up and do it. Perhaps once your LO arrives you will realize how scary the thought of leaving him or her to be cared for by someone else is, not to mention how scary that would be if you left the child without resources to provide for said care. It's a component of your responsibility as a parent.

iowaorganic 04-19-2010 12:27 PM

Why would you NOT provide the security of life insurance for both your partner and you dc? We have term policies with return of premium riders. So it is like a 0% interest savings account at the end of the 30 years. Not everybody thinks these are good ideas- but it works well for us.

rainbowmoon 04-19-2010 12:42 PM

Don't forget if you or your spouse dies you and your minor children will receive social security death benefits until your child graduates from HS or is 18 and 9months.

My parents decided not to get life insurance when I was growing up because of the SSA benefits. They felt comfortable with the amount they would receive I guess (My dad is not my birth father but apparently they looked into it and since he supported me financially since I was 2 it would apply in the event of his death)

I am widowed and I have lived off SSA death benefits for 5 years. My DH made good money (not quite 6 figures but almost) so we were lucky that he paid a big chunk into SSA. It's enough that I don't have to work unless I want to. And even then I am allowed to make a good chunk of change before I am penalized. Sounds like the OP and her spouse might also have a good income and paying alot into SSA so it's worth checking into.

I just got my own statement yesterday from SSA. It is just an estimate but it shouldn't be way off IMHO.

HappilyEvrAfter 04-19-2010 01:04 PM

I have to agree that life inusurance, whether whole or term (I vote whole) is extremely important.

I feel he's right. Life insurance is meant to be an "immediate" covergage in the event of a catastrophic event....investments are there to accumulate for later in life.
However, I would definetly shop around and not just go with your guy just because he's handling your investments.
There are some good, reputable companies out there with affordable premiums.

Nobody likes to think about death, but life insurance isn't about YOU, it's about those left behind and how you can take care of them.

mnnice 04-19-2010 01:14 PM

Just because you buy 25 year level term insurance doesn't mean you need/should pay the premium the entire 25 years.

We have term life insurance and I suspect that we will pay the premiums for a few more years, but not the entire term. We are becoming increasingly self-insured.

Starting in September both the kiddos in this family will be enrolled full-time in public school. The amount (both $ and time) of childcare that would be required to keep the surviving parent working is shrinking. Soon DS1 would be old enough to stay home along for an hour after school.

We own our home outright.

Also each day that we are both here is another day that our children are closer to adulthood/independence and that we have had an opportunity to save in other ways (at least theroticially, actual practice has been a bit spottier with DH unemployed)

Anyway your actual costs might be lower if you only end up need the coverage for 15 or 20 years not the entire 25 or 30 year term.

karkli 04-19-2010 01:53 PM

It does sound like he's trying to sell you on something that will be more profitable for him than beneficial for you. If you and your DH are in good health with clear histories, I suspect you can find more affordable options for coverage.

Still, life insurance is an important part of a complete, responsible financial picture - particularly when there are young children in the family.

A good compromise may be to go for a lower value term policy that would cover funeral expenses, loss of the deceased's income, possible loss of income for the surviving spouse due to time spent grieving, and any additional expenses incurred relating to the care of the child/ren in the event that one of you should die. A shorter term period would also decrease the premium, and might be a good option for you if you believe that you will be in a position to fully self-insure in the future.

As an example, we pay only $160/year for a $250k, 10-year level term policy on me. My DH has a $750k, 20-year level term policy that costs us under $675/year.

Say we were to take what we pay for DH's life insurance and invest it for the next twenty years, and say he were to pass away on the very last day of what would have been our 20-year policy. Making an average of 10%/year, we would have under $50,000 at the time of his death which, considering inflation and cost of living increases, may not even be enough to cover his funeral expenses - let alone provide any additional financial cushion or make up for the loss of his income.

I would look into what other insurance companies offer and go with wherever I could get the cheapest term coverage with the highest death benefit.

velochic 04-19-2010 02:24 PM

Quote:
Originally Posted by HappilyEvrAfter View Post
I have to agree that life inusurance, whether whole or term (I vote whole) is extremely important.
Why whole life insurance? Maybe I'm missing something in the OP.

cristeen 04-19-2010 03:26 PM

Quote:
Originally Posted by sunflower.mama View Post
I would not feel comfortable without life insurance. Not at all. My mom died when I was 16, so maybe I am biased, but yes, parents die. Kids still need home, school, etc. Even if the mom who stays home dies, you'll need to replace her w/ a housekeeper, nanny, etc.


Only my mom died when I was 12. And she left $77K worth of medical bills behind (what the insurance didn't cover). With no life insurance, that essentially bankrupted my father. And he still had to hire a FT housekeeper to watch us, clean the house, cook the meals, etc, since he was on the road 14 hrs/day.

Quote:
Originally Posted by rainbowmoon View Post
Don't forget if you or your spouse dies you and your minor children will receive social security death benefits until your child graduates from HS or is 18 and 9months.
You can't count on that though for being enough. My mom was a WAHM (self-employed) for many years keeping my father's books. But because she didn't draw an income from it, the death benefit was barely enough to pay for uniforms, books, etc., to get us through HS. This is going to be true for many SAHMs.

Because of all that, I view life insurance as crucial. When we got married we each picked up a policy large enough to pay off the house free and clear. When I got pregnant, we each doubled the coverage. So if something were to happen to the both of us, the LO's guardian would get $1M in trust plus the house (worth twice what we owe, even in this economy). If only one of us were to die, the other would get enough to pay off the house + enough to support the remaining family for years (private school + nanny or continue HS + PT childcare/PT work).

Yes, eventually you would hope that you have enough investments to make life insurance moot. But what happens if you die in a car accident when the baby is 2 mos old? How much will you have saved at that point? Would it be enough for your DH to stay home with the babe for 4 mos? Enough to pay a nanny or FT daycare for the next 5 years? Enough to pay for private school, music lessons, etc., for the next 18 years? etc...?

TiredX2 04-19-2010 04:33 PM

We also have term life insurance for the *worst* case scenario--- if we both died. Yes, I am sure the people who we have chosen as guardians would care for our children independent of money, but asking people to do that is a HUGE financial burden. We would want them to be able to increase house size, car size, get counseling for the entire family, and still have money for expenses.

IMO, the last thing you want to deal with in a tramatic event is further turmoil. And, for me, that is what not having enough $ following the death of my spouse would be

HappilyEvrAfter 04-19-2010 05:09 PM

Quote:
Originally Posted by velochic View Post
Why whole life insurance? Maybe I'm missing something in the OP.
Lol. Because I was having an idiot moment and meant term.

greenmom4 04-19-2010 05:21 PM

I know next to nothing about life insurance, but my husband didn't have any and I felt it necessary that we have something to cover any medical bills and housing costs should something happen to him. So we have a small policy for him (100k) and a supplemental policy on me (I get 50k through work and we purchased an add'l 50k). It's a really minimal amt per paycheck and it's a 20 year term policy. For me, if the unthinkable happens, the last thing I would want to do is worry about who is going to watch my kids, how we are going to pay hospital bills, etc, etc. So it's worth it for the peace of mind (well, for us, it is).

Hannah32 04-19-2010 05:29 PM

We're in the process of applying for term life insurance right now. We're looking at 30 year. Hubby is mired in underwriting process, which can be pretty messy. They have lots of questions, probably because he's only seasonally employed. I'm waiting until I'm post partum to apply, because my weight is really elevated and the agent said it would throw my blood levels off too.

rainbowmoon 04-19-2010 05:55 PM

Quote:
Originally Posted by cristeen View Post
You can't count on that though for being enough. My mom was a WAHM (self-employed) for many years keeping my father's books. But because she didn't draw an income from it, the death benefit was barely enough to pay for uniforms, books, etc., to get us through HS. This is going to be true for many SAHMs.
well thankfully it has worked out for us. for that I am grateful. Also, this is why I wrote if the OP And her spouse had high incomes they should look into it. I didn't mean count on it for the WAHM or SAHM with high debt that hasn't paid into SSA! Common sense here.

My DH had some medical bills too, they were completely dismissed (As was a 17,000 CC debt that he owed, thankfully in his name only but they tried sueing a dead person instead of his estate so the debt was completely dismissed) completely freeing me and his estate from any liability. I got lucky though I think.

It does work out for some. My children and I are proof. I have another widow friend who gets a higher amount of SSA death benefits as well. I certainly wouldn't discount it either if the OP and her spouse are making high incomes either. It's worth looking into at the least. And it doesn't get much easier when SSA sends you a statement each year telling you what your death benefits would be.

For us it has worked out in our favor actually. We actually get more in benefits than DH used to net per month. (No it's not a mistake and has been rechecked numerous times) I think at his highest he made about 89,000-91,000 just for a point of reference. We received 30,000 from 2 small policies which did help immensely.

sunflower.mama 04-19-2010 07:10 PM

Also consider what you want to do for your kids. When my mom died, we did get 1.5 years of SS benefits for me, and longer for my sister. They were a drop in the bucket of private school tuition, college and grad school which were down the road for both of us. We chose a 25 year policy when we changed life insurance last year because we wanted the policies to see our youngest (yet to be born) through college and possibly some grad school. Clearly that's not everyone's objective. But it's one of ours, as we plan for one parent's income to go straight to college and grad school for many many years. So counting on SS benefits, which end at age 18, wouldn't do a thing for that objective. As I said though, everyone has different plans. Just sharing our thinking.

sunnysandiegan 04-19-2010 09:36 PM

My thoughts are similar to the OPs in many ways. We don't buy into all the "insurance" our country is so incredibly fond of these days. Both cars are paid and we keep liability (higher than legal due to our COL) and uninsured (due to our location) coverage. I've been without health insurance due to the industry and DH has been without due to unemployment. (We're both covered now, though.) DD has always been covered (by the state during unemployment and by us at all other times). DD is 9.

We have a small policy on me and a larger (but relatively small compared to others in this thread) term life policy on DH. We also have a small AD&D policy on DH (same benefit amount as term policy, but half the premium cost because it doesn't cover health-related death). The 10 year term policy ends soon and we'll be deciding how we wish to proceed. We chose to cover our mortgage and cremation costs (our preference) and a few months income, which becomes more months as the mortgage shrinks. We also choose to save through a variety of investments (highest percentage is very safe) and have a year's worth of expenses in those accounts. We have additional funds, also, and excellent credit. Without a mortgage, all those funds would last several years, especially since those expenses are based on a family of three. Without me, DH & DD would have my retirement account (over a year's worth of expenses today). Without DH, DD & I would have his retirement account (about a year's worth of expenses today). Both of those retirement funds would be DD's if both of us were to pass, which is more than double my private university tuition.

If one or both of us were to pass, life would be different for the remaining family members. Regardless of life insurance payouts, life as you know it is going to change when a family member dies. In our case, the family we've asked to care for our child would not *need* any financial help (it is there anyway in a modest amount) and they have a large enough house, etc. Plus, if my dad were still living, he'd provide financially for DD indefinitely (and/or me, temporarily). DH's family would provide for him and/or our DD, if needed. No one in either family is rich, but everyone has reached financial maturity and handles finances well.

Try to remove the emotion from the situation and evaluate *your* situation independently of others. Do you have supportive family? What is the financial health of those family members? Do you own a home? What is the general fiscal policy for your immediate family (DH & you - savers/spenders, high/low-income earners, high/medium/no debt, etc)? Do you have any large debts that would need to be covered if one spouse were to pass (different laws govern this factor, too)? Age is also a consideration, as is genetic health.

I do recommend a life insurance policy for all parents, but I differ vastly on the benefit amount and relying solely on the insurance policy in the event of death. I believe in basic term life for low amounts and focusing on living life to the fullest and preparing for the future with a diverse approach. (Putting all financial eggs into the life insurance policy basket makes zero sense to me, especially when families struggle to put food on the table.) This advice applies to most, but not all people...everyone has something unique about their circumstances and those need to be taken into account.

[FWIW: I have a degree in finance and worked in securities, but none of the above is meant to be official financial advice. I am simply sharing my perspective since the OP & I have similar viewpoints.]

expat-mama 04-20-2010 10:52 AM

Wow, I have to admit I'm a bit surprised at the general one-sidedness of the responses. I do really appreciate your perspectives though, thanks!
I'm sorry to read about those of you who have had parents or spouses die. I still do think that the probability of that happening is very low. Yes my experience is anecdotal, but in my life I have only known one person (out of a great, great many over the years) who have had a parent die while they were minors. I guess I honestly don't worry about me or DH dying- in the same way that I don't worry that a meteor will fall out of the sky and land on our home or that my child would die from one of the diseases we will choose not to vaccinate for. But that's just me. I can understand that some people would gain peace of mind from life insurance- I guess that's just not me.

Quote:
Originally Posted by SeekingJoy View Post
What type of life insurance product(s) is he trying to sell you? Term? Whole life? Carrying a reasonable level of term life insurance (or having adequate investments to support the surviving partner or guardian) shouldn't be that expensive, and I think it the only resposible thing to do once kids are involved.
Term insurance. And it's not that expensive, I just think our money might be better spent in many other ways to prepare for the future. I think that saying it is the ONLY responsible thing is going too far- there are many other ways to be financially responsible for one's children besides life insurance! And we are looking into those ways just as we looked into life insurance.

Quote:
Originally Posted by MeepyCat View Post
Where on earth are you getting $30 to $40K quoted as premiums? That seems really high for a million in coverage.
Not premiums. I said the total investment in a term police of 25 years would be $30-40k.

Quote:
Originally Posted by sunflower.mama View Post
I just suck it up and do it. Perhaps once your LO arrives you will realize how scary the thought of leaving him or her to be cared for by someone else is, not to mention how scary that would be if you left the child without resources to provide for said care. It's a component of your responsibility as a parent.
I don't just suck anything up and do it. I like to think things through and find the best alternatives for me and my family. Lots of things I could imagine are "scary", and I never said I would leave my child without resources to provide for his or her care. I find your comment offensive and I think I can judge what my responsibilities as a parent are. Thanks.

Quote:
Originally Posted by iowaorganic View Post
Why would you NOT provide the security of life insurance for both your partner and you dc? We have term policies with return of premium riders. So it is like a 0% interest savings account at the end of the 30 years. Not everybody thinks these are good ideas- but it works well for us.
Again, life insurance is not the only way to provide security for my partner and child. Sheesh. I'm glad you found what works for you, I'm going to try to find what works for US!

Quote:
Originally Posted by rainbowmoon View Post
Don't forget if you or your spouse dies you and your minor children will receive social security death benefits until your child graduates from HS or is 18 and 9months.
I'm sorry to hear about your spouse dying. DH and I have worked outside our country (Canada) since leaving university so we have never really contributed to any governmental security/persion plan, and therefore are not eligible. We have investments and savings because of this.

Quote:
Originally Posted by mnnice View Post
Just because you buy 25 year level term insurance doesn't mean you need/should pay the premium the entire 25 years.

We have term life insurance and I suspect that we will pay the premiums for a few more years, but not the entire term. We are becoming increasingly self-insured.
True about not having to pay the entire 25 years. That's a good point. We are solidly on our way to becoming "self-insured" as well (if I understand your meaning of that).

Quote:
Originally Posted by sunnysandiegan View Post
My thoughts are similar to the OPs in many ways. We don't buy into all the "insurance" our country is so incredibly fond of these days. Both cars are paid and we keep liability (higher than legal due to our COL) and uninsured (due to our location) coverage. I've been without health insurance due to the industry and DH has been without due to unemployment. (We're both covered now, though.) DD has always been covered (by the state during unemployment and by us at all other times). DD is 9.

We have a small policy on me and a larger (but relatively small compared to others in this thread) term life policy on DH. We also have a small AD&D policy on DH (same benefit amount as term policy, but half the premium cost because it doesn't cover health-related death). The 10 year term policy ends soon and we'll be deciding how we wish to proceed. We chose to cover our mortgage and cremation costs (our preference) and a few months income, which becomes more months as the mortgage shrinks. We also choose to save through a variety of investments (highest percentage is very safe) and have a year's worth of expenses in those accounts. We have additional funds, also, and excellent credit. Without a mortgage, all those funds would last several years, especially since those expenses are based on a family of three. Without me, DH & DD would have my retirement account (over a year's worth of expenses today). Without DH, DD & I would have his retirement account (about a year's worth of expenses today). Both of those retirement funds would be DD's if both of us were to pass, which is more than double my private university tuition.

If one or both of us were to pass, life would be different for the remaining family members. Regardless of life insurance payouts, life as you know it is going to change when a family member dies. In our case, the family we've asked to care for our child would not *need* any financial help (it is there anyway in a modest amount) and they have a large enough house, etc. Plus, if my dad were still living, he'd provide financially for DD indefinitely (and/or me, temporarily). DH's family would provide for him and/or our DD, if needed. No one in either family is rich, but everyone has reached financial maturity and handles finances well.

Try to remove the emotion from the situation and evaluate *your* situation independently of others. Do you have supportive family? What is the financial health of those family members? Do you own a home? What is the general fiscal policy for your immediate family (DH & you - savers/spenders, high/low-income earners, high/medium/no debt, etc)? Do you have any large debts that would need to be covered if one spouse were to pass (different laws govern this factor, too)? Age is also a consideration, as is genetic health.

I believe in basic term life for low amounts and focusing on living life to the fullest and preparing for the future with a diverse approach. (Putting all financial eggs into the life insurance policy basket makes zero sense to me, especially when families struggle to put food on the table.) This advice applies to most, but not all people...everyone has something unique about their circumstances and those need to be taken into account.
Thanks for this. It's nice to hear an expression of a different viewpoint. And hey from a finance grad, too!
I really appreciate your comment about removing the emotion from the situation and evaluating my situation independently.
Do you have supportive family? More or less. If anything happened to me, dh, or baby-to-come our families would do ANYTHING to help us. We don't lean on them for any support and haven't in the past, though.What is the financial health of those family members? Pretty good. Do you own a home? No, we live abroad and our employers pay for housing. We don't plan on owning a home until we retire.What is the general fiscal policy for your immediate family (DH & you - savers/spenders, high/low-income earners, high/medium/no debt, etc)? Savers. Med-high income earners. No debt.Do you have any large debts that would need to be covered if one spouse were to pass (different laws govern this factor, too)? No.Age is also a consideration, as is genetic health. We're young (29 and 30) and we are very fit and healthy. Genetic health is probably average- people in our families get pretty old and die, with very few health bumps along the way.

I think a lot of people have a hard time removing the emotion from this issue (very understandably!) and it's something that dh and I have attempted to do. I think it's really easy to have a knee-jerk reaction when it comes to things like life insurance- and people saying things like "why wouldn't you want to be sure that your LO isn't provided for? etc." But I think the above questions are things that we have considered and are the main reasons WHY we have chosen not to buy into any big life insurance plan. I started this post thinking that there would be more people who might see things along the same lines and offer some insight and support (also fully expecting to hear the other side of it too of course...not expecting to feel so attacked, though).

I think dh and I are on our way to doing things similarly to what you and a PP have done- very minimal life insurance (we already have a free term policy through one of our banks for 100k...didn't mention it because we don't have to contribute to it), no debt, lots of savings and investments. After paying off our hefty student loans, we already have started retirement funds for both dh and I, an education fund for our future kid as well as investments, and solid enough careers should one of us have to go it alone. I think we have a good start for providing for ourselves and our kid even taking into account the unlikely possibility of a tragedy. Maybe I should have added all this as a preamble to my first post.

TwinMomPlus 04-20-2010 11:13 AM

I think you already decided you don't want to spend the money on it so I don't know what you are looking for here.

rainbowmoon 04-20-2010 11:13 AM

oh no SSA could not be counted on for private schools or college! no way! the family and DH coworkers did establish trust funds for the kids so they do have a little nest egg. Anyway my whole point was if you receive enough to live off of while your kids are minors, that is possible. most people don't but if your spouse was in a higher earning bracket it could be. that was my only point. I wasn't advocating NOT buying insurance exactly. just another option that is available to those paying alot into SSA. if you're eligible for it you might as well collect it (and at the very least the kids will get it automatically anyhow!)

Quote:
Originally Posted by sunflower.mama View Post
Also consider what you want to do for your kids. When my mom died, we did get 1.5 years of SS benefits for me, and longer for my sister. They were a drop in the bucket of private school tuition, college and grad school which were down the road for both of us. We chose a 25 year policy when we changed life insurance last year because we wanted the policies to see our youngest (yet to be born) through college and possibly some grad school. Clearly that's not everyone's objective. But it's one of ours, as we plan for one parent's income to go straight to college and grad school for many many years. So counting on SS benefits, which end at age 18, wouldn't do a thing for that objective. As I said though, everyone has different plans. Just sharing our thinking.

SeekingJoy 04-20-2010 03:25 PM

Quote:
Originally Posted by expat-mama View Post
Yes my experience is anecdotal, but in my life I have only known one person (out of a great, great many over the years) who have had a parent die while they were minors. I guess I honestly don't worry about me or DH dying- in the same way that I don't worry that a meteor will fall out of the sky and land on our home or that my child would die from one of the diseases we will choose not to vaccinate for. But that's just me. I can understand that some people would gain peace of mind from life insurance- I guess that's just not me.
Anecdotal experience isn't really an adequate foundation for evaluating whether you need some financial plan -- life insurance or otherwise -- for a surviving spouse and children. It isn't a matter of opinion. There is a statistical chance you or your spouse will die while you have a minor child.

Quote:
Originally Posted by SeekingJoy View Post
What type of life insurance product(s) is he trying to sell you? Term? Whole life? Carrying a reasonable level of term life insurance (or having adequate investments to support the surviving partner or guardian) shouldn't be that expensive, and I think it the only responsible thing to do once kids are involved.
Quote:
Originally Posted by expat-mama View Post
Term insurance. And it's not that expensive, I just think our money might be better spent in many other ways to prepare for the future. I think that saying it is the ONLY responsible thing is going too far- there are many other ways to be financially responsible for one's children besides life insurance! And we are looking into those ways just as we looked into life insurance.
I am not sure you fully read my post. There are other ways to be financially responsible for surviving dependents; I agree, and I posted as much. However, deciding to not do anything to prepare, to leave a guardian without adequate financial resources, etc isn't responsible.

Being self-insured is of course a perfectly valid option. There isn't much reason for a multi-millionaire -- as an extreme example -- buy term life insurance without other extenuating circumstances.

TiredX2 04-20-2010 04:40 PM

Quote:
Originally Posted by SeekingJoy View Post
Being self-insured is of course a perfectly valid option. There isn't much reason for a multi-millionaire -- as an extreme example -- buy term life insurance without other extenuating circumstances.



We have actually lowered *my* coverage as the kids aged. We are closer to paying off the house AND they would not need as much expensive care (they are 8 & 11). When they were younger they would have needed a nanny or something, now they could just go to afterschool care until DP picked them up. DP's life insurance, though, we have continued to increase with his income because if he died I would need to return to school (which becomes every more expensive) to support myself & the kids.

When the children are both out of the house we will probably drop coverage on me to a very minimal level (enough to pay for funeral, counseling and time off for DP to recover) because we wouldn't need to *financially* support him. If you, OP, are already at a point where the money from life insurance would be unnecessary then you don't need it. If your family relies on you financially, though, I would get whatever coverage would provide that.


sunflower.mama 04-21-2010 09:28 AM

I, for one, am sorry you felt offended by my post. It's hard to come on here and ask for advice without getting people's 100% honest advice, and sometimes it comes across harshly. That being said, I have a hard time imagining that someone balking at $100 a month or so for life insurance has the resources to support a child through adulthood sitting around but I have NO IDEA of your resources, obviously. It's a logical assumption nonetheless. Of course our family would do "anything" for our kids, including raising them if we couldn't. But I'd want to take the financial stress out of that picture. That is why I "suck up" life insurance premuims even though I don't believe I/we will ever die and need the policies.

BTW my point about your perspective changing after you became a parent was not meant to be condescending or anything. It was my own experience that my financial goals changed, slowly, after becoming a parent. I was suggesting that you remain open to that possibility as well.

rainbowmoon 04-21-2010 12:36 PM

It's kind of funny, my new partner DOES NOT believe in life insurance whatsoever (he is morally opposed). Thankfully we (my kids and I) don't depend on his income. But since we are having a new babe it is coming up a bit as we must plan for the future somehow. My main concern is retirement but I plan to have a new career by time I go off social security (I have many other skills too, so I have lots of options unlike some folks who find themselves in my situation) I consider myself extremely lucky to have the options I have been given. We also have many Quaker friends who also don't believe in life insurance as well. I don't think it's bad per say but you MUST have another plan (or at the least some savings) if there are kids involved.

onlygirls 04-21-2010 11:04 PM

I would get more quotes before you make up your mind. We have almost $300k on DH and $150k on myself for less than $100 a month. His policy was started when he was in the military and deploying to Iraq, so i think anybody could get a better rate.

Also, our policies include child riders so that if something happened to our children, it would pay for funeral costs.

If you are comfortable with the policy through your bank, then that may be enough for your family, but I would not go through life with $0 life insurance.

ameliabedelia 07-24-2010 10:10 AM

Quote:
. Yes my experience is anecdotal, but in my life I have only known one person (out of a great, great many over the years) who have had a parent die while they were minors

I find this very surprising. I can easily think of at least 8 familes I know where at least one child was still a minor when a parent died. (in 6 of those cases it was the dad, and 2 involved the mom). In at least 5 of those cases, death was VERY unexpected and sudden. Three of those families had children under 3 years of age when the death occurred.

Say parents have their youngest child at age 35. At age 56, that child graduates from college. I don't think the risk of dying before age 56 is *very low*

OP...it looks like your partner is 31 and you just had your first baby. CONGRATULAIONS!! If you're thinking you might have more kids, then he could easily be mid-50's by the time the youngest is completely our on their own.

The other thing about life insurance, is you really want to get into it while you are young and healthy, since as soon as you develop any kind of health condition, it become way, way more expensive.


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