Life insurance

[Playa]

I have a few life insurance policies already, but 1 is through work that I assume I would lose if I decide to leave. I also do not have the recommended 8x’s salary, but I also think the people who recommthis are trying to sell you life insurance...

So I turn 40 in a few months, thinking I need to add a policy or increase the benefit before I hit That milestone.

What recommendations or policies do you recommend?

[chasinracks]

IMO it just depends on what your budget is and what your short term and long term projections and lifestyles hope to be(debt free, kid dependent free, retirement plan performance, etc ) I sell insurance with Farm Bureau if you’d like to discuss in more detail

[mikebyrge]

You can probably keep your policy through work if you leave but it will cost you a lot more than you paying now. I did that 10+ years ago and I am glad that I did.

I've struggled with how much is "enough" too. I don't want my wife and kids to struggle if I am gone and my wife has been out of the workforce so long she would have a difficult time supporting herself let alone the two kids we still have at home.

I've always carried at least the recommended minimums but it is expensive.

[175gr7.62]

I just purchased a 20yr $1M policy and 30yr $500k policy. I'm 42 with no health issues and I think the total cost is about $200/month.

[hooligan]

I have 2 policies outside of work for the reason you stated. Those 2 alone would cover all debt that we have including the house and give my wife about 10 years without a lifestyle change. I didn’t go 8x because we’re working really hard on getting rid of all of our debt right now and once we do that portion of the policy could be used for the kids college funds

[elhefe]

I sell for Farm Bureau as well. Life Insurance is one of the necessities not many people think of. Good for you for thinking about it and caring for your family. You really need to do an assessment of your debt and then factor in future costs...like burial, college, and for your spouse to not have to work for several years while maintaining your current lifestyle. I would recommend a combination of whole and term. Term is obviously cheaper, but at the end of that term you get nothing to show for it. Kind of like renting a house. Whole is more expensive but you own it. You can draw off of the interest gained if necessary and once it matures it stays in tact. I have a whole life policy that has reached its maturity and the dividends earned continue to pay for the policy. Several good agents here that can help but if you have any questions feel free to email me at jphillips1@txfb-ins.com

[Chef]

I sell for Farm Bureau as well. Life Insurance is one of the necessities not many people think of. Good for you for thinking about it and caring for your family. You really need to do an assessment of your debt and then factor in future costs...like burial, college, and for your spouse to not have to work for several years while maintaining your current lifestyle. I would recommend a combination of whole and term. Term is obviously cheaper, but at the end of that term you get nothing to show for it. Kind of like renting a house. Whole is more expensive but you own it. You can draw off of the interest gained if necessary and once it matures it stays in tact. I have a whole life policy that has reached its maturity and the dividends earned continue to pay for the policy. Several good agents here that can help but if you have any questions feel free to email me at jphillips1@txfb-ins.com

This......

[Dale Moser]

One thing is for sure, I'm worth more dead than I am alive.

[2B4Him]

When based on 'formulas', I think most people end up over-insured.
Life insurance is to avoid financial crisis for those left behind, it is not intended to be a 'lottery' of financial windfall.
Most people should also be lessening their life insurance as life goes by - when one kid is out on their own, when the mortgage is paid off, etc. - there is a little less need for financial protection as obligations are removed/resolved.
So, by the time you are my dad's age - 82 and financially secure - I think you should have only enough life insurance to cover funeral expenses.

[Rush2Judge]

One thing is for sure, I'm worth more dead than I am alive.

And this is why I did not ever get more than 2x salary. I didn't want to tempt my wife. She has always had a successful career so I told her she has two years to replace my income. That should be plenty of time for her to find someone else.

Honestly, we did not view life insurance as a way to hit the jackpot. I have never heard the 8x number and it baffles me. We each have insurance through work. As long as we had enough to replace one salary for a few years and help with college fund that was enough for us.

[Catfish270]

Life insurance is one of those things that I don't think should be an afterthought in the family planning process. In my mind, it should be one of the top priority expenses in the budget. While my work offers life insurance that has a comparable cost to the open market, I have transitioned my life insurance outside of work for the reason mentioned. If something happens and am no longer employed at work, that benefit will not continue if I leave. As far as how much is enough, every situation is different (age, kids/no kids, debt level, etc.). I might even be a little on the high side, but if something happens to me I want things to be comfortable for my wife and kids. I only have term life insurance as I think it is the best bang for your buck compared to whole life policies.

[Mudslinger]

One thing is for sure, I'm worth more dead than I am alive.

Me too!

[hooligan]

One thing is for sure, I'm worth more dead than I am alive.

My wife knows I’m worth more in the ground but for my safety she doesn’t know how much more!

[sooner6969]

I just purchased a 20yr $1M policy and 30yr $500k policy. I'm 42 with no health issues and I think the total cost is about $200/month.

At that age, that length and that amount. That is awesome!

[TKK]

I have sold it for 39 years so I have witnessed a lot over that time with clients and friends. I have witnessed where the surviving spouse was left with enough and where they were left with too little. The latter is not a pretty picture.

There is no rule of thumb - each persons situation is totally different from the next. Some need no life insurance and some need much.

The goal IMO is to leave a surviving spouse living the same life style they were while you were alive. There is a simple formula where one can plug in their numbers and get a general idea of how much they may need.

1. Debt - do you want your mortgage and any other debt to be paid off? If so plug that number in.
2. Kids college - if you have kids and want to provide for their college even if you are not here then plug in that number. Typically it will be roughly what college would cost four years in today's money times the number of kids. If you die and the life insurance dollars are invested till the kid is 18 then it will grow enough to keep up with increasing college cost.
3. Finally, and the most important, is income replacement. If you die so does your income. The formula I use with folks is to take their combined total income. Multiply it by 70% (what it takes for two to live versus one takes less income) - this number gives you what the needed on-going income is for your surviving spouse to live the same life style (and assumes all debt is paid off).

Next you determine how to provide that on-going income - factor in if the surviving spouse works and if they do subtract that from the above income need. Factor in if there will be any other on-going income for the survivor such as rental income, social security, etc. and subtract that. The remaining amount is the shortfall needed to provide on going income.

So add up any investments, savings, and existing life insurance and see what that total is. For example, if the total is $500,000 if would produce on going income of $25,000 per year (assuming an average 5% return). If that is enough to meet the above income need then you are good to go. If it is not then you make up the difference with additional life insurance. So again, for example, say the income shortage was actually $50,000 then you would need an additional $500,000 of insurance to assure your spouse the proper amount.

Keep in mind life insurance is income tax free to the beneficiary in most cases.

If you have a family or people who depend on you then it is not something to just guess at IMO - it can make the difference in a loved ones life for sure because I have witnessed it many times. Hope this helps.