Ziachild007 Posted March 2, 2007 Share Posted March 2, 2007 I am looking into getting a life insurance policy, but not sure what is the best way to go. IIRC, someone asked before and it was mentioned that term is the best way to go. But my biggest question is how much coverage should I get? Any help would be appreciated. Quote Link to comment Share on other sites More sharing options...
untateve Posted March 2, 2007 Share Posted March 2, 2007 I'm probably not the best person to ask because I and my wife are over insured. I figure that is my wife or I die, I want the parent who remains behind to really be able to focus on raising the children. At that point, there would only be one parent and that's a lot of work. So my wife and I are each insured for about 1.2 million. Quote Link to comment Share on other sites More sharing options...
whomper Posted March 2, 2007 Share Posted March 2, 2007 I am looking into getting a life insurance policy, but not sure what is the best way to go. IIRC, someone asked before and it was mentioned that term is the best way to go. But my biggest question is how much coverage should I get? Any help would be appreciated.    I think the answer directly relates to a few questions  1. Mortgage on your home 2. Kids you have   Im sure there are tried and true formulas for this but I approached it using the questions above. I have a term policy. God forbid something happen to me my mortgage is paid and there is 500,000 left over. In the big scheme of things thats not a great deal considering college costs but its a good cushion for my wife to start with. Its interesting that people weigh life insurance over disability insurance which is more likely then death but expensive...Good luck Zia hope this helps Quote Link to comment Share on other sites More sharing options...
Sugar Magnolia Posted March 2, 2007 Share Posted March 2, 2007 I'm probably not the best person to ask because I and my wife are over insured. I figure that is my wife or I die, I want the parent who remains behind to really be able to focus on raising the children. At that point, there would only be one parent and that's a lot of work. So my wife and I are each insured for about 1.2 million. Â Â There is a great formula in Andrew Tobias' book The Only Investment Guide You Will Ever Need, and my guru when it comes to investing. The formula would take to long to retype it here. Many want the house paid off and kids tutuition paid off above and beyond his formula so easy to change and manipulate to your desires but his formula is a good basis. Â This book offers other great advice for a $15 book. He also goes into types of insurance to buy and warns insurance agents will push whole life and universal because the commission rates are higher. He says stay away from universal, that insurance should never be purchased as an investment vehicle. Â He does suggest to go here to get insurance quotes: Â quickquote.com term4sale.com insweb.com Quote Link to comment Share on other sites More sharing options...
Sugar Magnolia Posted March 2, 2007 Share Posted March 2, 2007 Oops sorry for all the typos in the last post-hubby is calling me-breakfast is ready-typin' too fast. Quote Link to comment Share on other sites More sharing options...
Big Country Posted March 2, 2007 Share Posted March 2, 2007 Oops sorry for all the typos in the last post-hubby is calling me-breakfast is ready-typin' too fast. Â Â Make me a sammich while you're at it. Quote Link to comment Share on other sites More sharing options...
yo mama Posted March 2, 2007 Share Posted March 2, 2007 (edited) Term is what most families should get. Whole life is more of an estate planning tool. Â Figure outstanding mortgage, plus college expenses, plus cost of burial, all other debt (credit cards/car notes/student loans/estate taxes). That's the minimum. You lump on top of that an additional amount that the "surviving spouse" would use as an annuity to supplement their income so that they could take some time off work to do whatever, and after they got back to it the family didn't take a big hit on standard of living. Â It's that last part that requries some thought, as it is dependent on projecting your income and standard of living during the term. And you and your wife's income earning potentials are probably different, which means you'll probably want to get a different amount of coverage on each of your lives. Â Also, if you think you'll die with a taxable estate you may want to consider structuring the life insurance through an ILIT ("irrevocable life insurance trust"). If not, then don't worry about it. Edited March 2, 2007 by yo mama Quote Link to comment Share on other sites More sharing options...
cliaz Posted March 2, 2007 Share Posted March 2, 2007 I think the answer directly relates to a few questions  1. Mortgage on your home 2. Kids you have Im sure there are tried and true formulas for this but I approached it using the questions above. I have a term policy. God forbid something happen to me my mortgage is paid and there is 500,000 left over. In the big scheme of things thats not a great deal considering college costs but its a good cushion for my wife to start with. Its interesting that people weigh life insurance over disability insurance which is more likely then death but expensive...Good luck Zia hope this helps    Term is what most families should get. Whole life is more of an estate planning tool.  Figure outstanding mortgage, plus college expenses, plus cost of burial, all other debt (credit cards/car notes/student loans/estate taxes). That's the minimum. You lump on top of that an additional amount that the "surviving spouse" would use as an annuity to supplement their income so that they could take some time off work to do whatever, and after they got back to it the family didn't take a big hit on standard of living.  It's that last part that requries some thought, as it is dependent on projecting your income and standard of living during the term. And you and your wife's income earning potentials are probably different, which means you'll probably want to get a different amount of coverage on each of your lives.  Also, if you think you'll die with a taxable estate you may want to consider structuring the life insurance through an ILIT ("irrevocable life insurance trust"). If not, then don't worry about it.     these are both great posts for advice on Life ins. Quote Link to comment Share on other sites More sharing options...
muck Posted March 2, 2007 Share Posted March 2, 2007 Lets run some quick math: Â Say, hypothetically, two kids under 5 years old, a wife and a $200,000 mortgage. Â Insurance amount = Burial Costs + Mortgage + $3k / month in current after-tax dollars in living expenses (inflation adjusted) for 20 years (until the youngest is 22), which no longer includes the need for a mortgage or one spouses life insurance policy + $100k / kid for five years at a state university (tuition, room, board, books, required fees) = $15,000 + $200,000 + $635,000 (earning 5% / yr, after taxes) = $850,000 (minimum need) Â NOTE: I am not an insurance guy. Inflation was assumed at 2.5% / yr. There was nothing 'extra' built in that wouldn't be covered by the $3k / month (net of taxes) income that would need to be paid for (braces, private school, vacations, cars, large medical bills, etc). Quote Link to comment Share on other sites More sharing options...
Ziachild007 Posted March 2, 2007 Author Share Posted March 2, 2007 I'm 30, non-smoker, so it looks like I can get a pretty decent rate. I have 4 kids (1, 1, 2, 7), so I think the 30 year term would be better than the 20 year. Does that make sense or is there something I am over looking? Quote Link to comment Share on other sites More sharing options...
twiley Posted March 2, 2007 Share Posted March 2, 2007 Lets run some quick math: Â Say, hypothetically, two kids under 5 years old, a wife and a $200,000 mortgage. Â Insurance amount = Burial Costs + Mortgage + $3k / month in current after-tax dollars in living expenses (inflation adjusted) for 20 years (until the youngest is 22), which no longer includes the need for a mortgage or one spouses life insurance policy + $100k / kid for five years at a state university (tuition, room, board, books, required fees) = $15,000 + $200,000 + $635,000 (earning 5% / yr, after taxes) = $850,000 (minimum need) Â NOTE: I am not an insurance guy. Inflation was assumed at 2.5% / yr. There was nothing 'extra' built in that wouldn't be covered by the $3k / month (net of taxes) income that would need to be paid for (braces, private school, vacations, cars, large medical bills, etc). Â Is five years typical for college these days? Quote Link to comment Share on other sites More sharing options...
Tford Posted March 2, 2007 Share Posted March 2, 2007 The rule that my father said to me was, Â "Get enough to cover your house/debt and burial costs and then at least 100k per person you leave behind." Â Thus I have about 650k for life insurance. Â That's Canadian dollars though Quote Link to comment Share on other sites More sharing options...
muck Posted March 2, 2007 Share Posted March 2, 2007 Is five years typical for college these days? Â Â Change majors a bunch ... whatever. Built in a bit of a fudge factor. Â Unless the kid is real motivated, then they could maybe do one of those 3/2 programs where they get a masters at the end of the 5th year. Quote Link to comment Share on other sites More sharing options...
wiegie Posted March 2, 2007 Share Posted March 2, 2007 Is five years typical for college these days? Â pretty much Quote Link to comment Share on other sites More sharing options...
muck Posted March 2, 2007 Share Posted March 2, 2007 The rule that my father said to me was,  "Get enough to cover your house/debt and burial costs and then at least 100k per person you leave behind."  Thus I have about 650k for life insurance.  That's Canadian dollars though   How long ago did your dad tell you this? May want to bump that number up for inflation between then and now... Quote Link to comment Share on other sites More sharing options...
twiley Posted March 2, 2007 Share Posted March 2, 2007 Change majors a bunch ... whatever. Built in a bit of a fudge factor. Â Unless the kid is real motivated, then they could maybe do one of those 3/2 programs where they get a masters at the end of the 5th year. Â Gotcha... I thought I missed some new education guidelines. Quote Link to comment Share on other sites More sharing options...
muck Posted March 2, 2007 Share Posted March 2, 2007 I'm 30, non-smoker, so it looks like I can get a pretty decent rate. I have 4 kids (1, 1, 2, 7), so I think the 30 year term would be better than the 20 year. Does that make sense or is there something I am over looking? Â Â With four kids at those ages, I'd bet you'd be looking at $1.5 million pretty easily... Quote Link to comment Share on other sites More sharing options...
muck Posted March 2, 2007 Share Posted March 2, 2007 Gotcha... I thought I missed some new education guidelines. Â Â IIRC, Accounting is now a five year degree... Quote Link to comment Share on other sites More sharing options...
Tford Posted March 2, 2007 Share Posted March 2, 2007 How long ago did your dad tell you this? May want to bump that number up for inflation between then and now... Â Â I guess that was when I was a kid. Â Mind you, my total debt is only 250k. That puts me at 200k for the wife and 200k for the daughter. Â Probably still a little thin, and I do have twins on the way. How bad is the premium increase to get into the million range? Quote Link to comment Share on other sites More sharing options...
yo mama Posted March 2, 2007 Share Posted March 2, 2007 (edited) I'm 30, non-smoker, so it looks like I can get a pretty decent rate. I have 4 kids (1, 1, 2, 7), so I think the 30 year term would be better than the 20 year. Does that make sense or is there something I am over looking? Â 25 year is worth exploring, but I agree that 20 may not be long enough to cover your "vulnerable years." Also, it is worth checking into a special kind of insurance that refunds all your premiums at the end of the term, assuming you live past it. You pay a bit more during your life. But hey: if you're lucky enough to live that long, you'll get it all back. Â Check out this site for some decent estimates of what things might cost, relative to one another. Edited March 2, 2007 by yo mama Quote Link to comment Share on other sites More sharing options...
Rockerbraves Posted March 2, 2007 Share Posted March 2, 2007 Always wondered why they call it life insurance instead of death insurance. Quote Link to comment Share on other sites More sharing options...
gerry.harris Posted March 2, 2007 Share Posted March 2, 2007 I would recommend getting at least some portion of the policy, like maybe $50,000, in whole life. I work in insurance and i can not tell you how many times people in there 60's, 70's, or 80's will come in when there term has expired and want to buy more life insurance and can't becuase the rates at that age are too high or because of their health they are no longer insurable. So, while you are young and you know you are insurable, and the rates are still low and can be locked in, I would definitley get enough in whole life to cover your burial and final expenses and if you want to get the rest to cover the mortgage and college for the kids in term that is fine. That is why we push whole life, because we see what happens to people who put all of there insurance in term when there term runs out and they always tell us, "Man, if i had only went ahead and bought some whole life insurance when i was younger, i would not be in this situation now." It is NOT, at least for me anyways, because the commision is higher. The commision is a little higher (very little), but i do it for the reason that i just stated. Quote Link to comment Share on other sites More sharing options...
wiegie Posted March 2, 2007 Share Posted March 2, 2007 I would recommend getting at least some portion of the policy, like maybe $50,000, in whole life. I work in insurance and i can not tell you how many times people in there 60's, 70's, or 80's will come in when there term has expired and want to buy more life insurance and can't becuase the rates at that age are too high or because of their health they are no longer insurable. So, while you are young and you know you are insurable, and the rates are still low and can be locked in, I would definitley get enough in whole life to cover your burial and final expenses and if you want to get the rest to cover the mortgage and college for the kids in term that is fine. That is why we push whole life, because we see what happens to people who put all of there insurance in term when there term runs out and they always tell us, "Man, if i had only went ahead and bought some whole life insurance when i was younger, i would not be in this situation now." It is NOT, at least for me anyways, because the commision is higher. The commision is a little higher (very little), but i do it for the reason that i just stated. Â Before somebody did this, I would suggest that they consider "self-insuring" for that $50,000. I'm betting that if you took the money that you would have paid for that whole-life policy and instead put it into an index or mutual fund, that it will be worth more than the $50,000 that the policy would be worth at the time you are going to need it (which will be sometime more than 20 years from now when your term life runs out.) Even better, you won't have to die to get the money in case you really need it for something else. Quote Link to comment Share on other sites More sharing options...
Sugar Magnolia Posted March 2, 2007 Share Posted March 2, 2007 Before somebody did this, I would suggest that they consider "self-insuring" for that $50,000. I'm betting that if you took the money that you would have paid for that whole-life policy and instead put it into an index or mutual fund, that it will be worth more than the $50,000 that the policy would be worth at the time you are going to need it (which will be sometime more than 20 years from now when your term life runs out.) Even better, you won't have to die to get the money in case you really need it for something else. Â Â I like the way you think... My husband and I have no kids -so we have no life insurance. My first thought was why someone between 60-80 years old needs life insurance, but not being in the insurance biz, I may be missing something. Quote Link to comment Share on other sites More sharing options...
wiegie Posted March 2, 2007 Share Posted March 2, 2007 I like the way you think... Finally... somebody who loves me for my mind rather than for my charmingly handsome good looks. Quote Link to comment Share on other sites More sharing options...
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