@littlefish40 The real question is: do you feel good about having that much protection for your family and is it putting an unnecessary crunch in the budget? If you can afford it and you want it then keep it. There aren’t really any downsides.
@robertnduati Yes, I can afford it but, like everything else, some of the money could be going towards kids' tuition savings account. I am not looking at the insurance as a payday but an income replacement tool.
I have read that the insurance should be 10-15x income but I also need to take into account that inflation in 10 years may mean that what is being overinsured now, may just be right then.
@littlefish40 Check out lifehappens.org and plug some of that information into it along with some questions and you will find out exactly how much protection you should have.
@littlefish40 Social security income will be for the children only and stops at age 18, your wife can't collect survivor benefits until age 60. How much will your wife need to maintain your lifestyle? Is the expectation that if something unfortunately would happen to you she would go back to work FT after the 5-7 day bereavement leave? Also, if you change jobs you can't count on that employer offering the additional coverage. If you can afford the $220, IMO that is the better option and you could cancel later. Also, is your wife insured?
@seohce Yes, she is insured although her coverage is $400,000 only. Yes, she will most likely be going back to work, if for nothing else, health insurance only.
I am seeing insurance as an income replacement tool to cover tuition for two children, pay off mortgage, and ensure that my family can continue the current lifestyle without any change.
@littlefish40 To clarify it is not if your wife would never go back to work. When I ask most people with kids they all say, yes go back to work however wouldn't want to do it FT time immediately. Most seem to say their ideal is 6-12 months off with the kids and then PT for 6-24 months depending on their children's age. So, then the need for insurance coverage, replacing lost retirement savings, should be factored in. Also, with now as a single parent any childcare cost needs to be factored in, although the children's social security survivor benefit may cover a good bit of that expense. Family may be available, however situations change. IMO, the same should be looked at for your wife's coverage, if you wanted to take 6 months off is $400k enough to payoff debt and cover all living expenses? On your salary alone, you should be able maintain the lifestyle with your mortgage paid off and save for college. However, having additional coverage for your wife would remove the uncertainty and any pressure from you to maintain the same income.
@littlefish40 This is exactly what I mean when I talk about people having too much insurance and spending too much when they're just going to outlive the policy. Easily could had built an IUL and built it for retirement now he is stuck with terms that will get even more expensive as he ages. (Sigh). I swear my clients don't know how good they got it/will get it.
@littlefish40 I swear I really feel like you guys are like the people who come in to the gas station I work at playing lottery/scratch offs way too much. Just gambling away. You need to evaluate yourself, your eating habits, etc. If you're someone who lets himself go, doesn't have self control over eating habits or have other unhealthy tendencies then you should just go with term.
If you like to juice, carrots beets, you work out 2 times a week, you drive a suv/truck, you should look more towards whole life.
You guys can't just roll the dice and bet. You're wasting money that way and can easily lose. You need to evaluate yourself and make the correct decision in a life insurance policy.
@littlefish40 Jesus Christ that's a lot compared to me. I signed a 20yr $250k just to get my kids through graduation. My income is roughly $200k/yr but about $120k is business distribution, so that would continue regardless. My total debt right now is like $700k, which half is my mortgage. I might be Underinsured, but I'm not betting on life insurance as a payday.
If it fits your budget, it's fine. It's definitely safe. I always just looked at life insurance to cover the debts I have if I leave any behind.
@cmd You are right that life insurance isn't intended to be a financial windfall for the beneficiaries. If you want it to cover your debts then you would appear to be have a $450k shortfall. If you know some of the debt will be paid off sooner than others you can get shorter length term policy(ies).
@seohce The value of the ownership is roughly $500k, but it will be worth it in the long run to earn the $100-$150k/year it will distribute. I'm at least covered, I just haven't seen people have so much before, or heard. Originally I was going to move towards 500k-1M however I got lucky to be covered during COVID when testing wasn't needed, then I damaged my Liver so now I can't get covered for more without having a large premium.
@cmd If you damaged your liver you might want to consider converting that $250K to permanent. Plenty of carriers will allow you to convert to permanent with no further underwriting if you have place a policy in the last 4 years.
@learningasigo That's what I'm thinking. I'm getting retested this week to see if my blood work has been cleaned up, and if not, then I'm going to consider if it's worth it or if I can set myself up financially to be self insured in 15 years.
@cmd Ask your agent to show you the concept of linear asset pay down with and without a permanent death benefit. Plenty of people don’t think they need a death benefit forever, but rarely do they see how much better their life is when they have the permission to spend their other assets down
