How much life insurance do you carry?

[Mountain Man Hawk]

Both my wife and I currently have 4x life insurance and we just had our 2nd kid not long ago. She thinks with 2 little kids now we need to increase our coverage. I'm curious how most people go about determining what is the right level of coverage to have. We have no debts other than the house (cars are paid off, no student loans, no credit card debt). And we put 20% down when we bought the house so assuming both my wife and I were to go, the house would just get sold and the kids would go live with my sister-in-law on the other side of town. We already have a will that outlines all of that. Any advice would be appreciated. Thanks.

 

[Wendy79]

If only one of you were to die...what would the remaining spouse need/want? Pay off the house, fix stuff up to sell the house, increased childcare costs, college paid for?

 

[22*43*51]

The guideline is generally 10-12x your annual salary.

That is the range me and Mrs. 22* stay.

 

[The Tradition]

2X.

Kids are grown. That's enough to pay off the house and the wife would get widow SS benefits.

 

[SF HAWKEYE]

We have $1 Mil between us. $700K on me since she stays at home with the kids. If I die unexpectedly I don't want her to have to do a gofundme to pay for my burial. Also want the kids to have college funds.
A guy I worked with died unexpectedly while on a business meeting at 40 years old and had 4 kids and zero life insurance. Put his family in a terrible position. My company ponied up $20K for expenses for the family.

 

[unIowa]

1. What are each of your earnings (individually)?
2. How much more do you owe on the house?
3. How much do you have saved in retirement?
4. How much do you have saved in non-retirement?
5. Are you planning on paying for your kids college education? If yes, how much do you have saved for it now?

Someone that has a $1mm in assets saved up and no debt where both spouses have healthy incomes may not need all that much life insurance. Someone with few assets, lots of debt, lots of other responsibilities, and moderate spousal income may need quite a bit more.

The old 10x or 20x pay means nothing really, it is all situational.

 

[nyc97]

$2.5M, enough to pay off the mortgage, put 3 kids through college & grad school and retain our nanny until the youngest is in high school.

 

[artradley]

Both my wife and I currently have 4x life insurance and we just had our 2nd kid not long ago. She thinks with 2 little kids now we need to increase our coverage. I'm curious how most people go about determining what is the right level of coverage to have. We have no debts other than the house (cars are paid off, no student loans, no credit card debt). And we put 20% down when we bought the house so assuming both my wife and I were to go, the house would just get sold and the kids would go live with my sister-in-law on the other side of town. We already have a will that outlines all of that. Any advice would be appreciated. Thanks.

"Experts" habitually overstate how much you need. Everybody is unique so you have to do the math and make your own priorities. If you die tomorrow so you feel your wife should have enough money to go the rest of her life without working or remarrying, every kid can get six years of college without working or borrowing money? And do you want to ignore SS bennies because you don't trust they'll be around? Is so, you better get 15-20x.

Otherwise, since you probably won't die until your kids are grown, you will probably need far less.

Whatever you decide on, you should do this:

Compute the total you would need if you were to die tomorrow. Divide by four. Buy four term policies. Five year, ten year, fifteen year, and twenty year. As you get older your needs decrease, so every five years you drop a policy.

 

[DavenportHawk8]

We have $1 Mil between us. $700K on me since she stays at home with the kids. If I die unexpectedly I don't want her to have to do a gofundme to pay for my burial. Also want the kids to have college funds.
A guy I worked with died unexpectedly while on a business meeting at 40 years old and had 4 kids and zero life insurance. Put his family in a terrible position. My company ponied up $20K for expenses for the family.

Yup we have coverage for both of us set at 1million. So if either of us die, we want to be sure the other's set for a while to cover funeral costs, any debts, and children's college. Hopefully never have to use it. And supposedly we are on this "return of premium" plan so if we don't use it in 30yrs, we get our premiums back. Anyone ever heard of this?

 

[Hawkeyenuts66]

Why would I need money if I'm dead?

 

[PerkyForHerky]

We both do 8x of our annual salary through our employer (same company).

Employer offers 6x base and then we each did 2x additional through proof of good health

 

[Derekd3408]

2M on me and 100k on the wife.

 

[unIowa]

Why would I need money if I'm dead?

And if ones wife is smoking hot, like mine is, they won't have any problems having their needs taken care of.

 

[Hawkeyenuts66]

And if ones wife is smoking hot, like mine is, they won't have any problems having their needs taken care of.

I know right; why the hell would I want to croak and then fund their life playful antics... Just doesn't seem fair to me.

 

[Pepperman]

have about another 9 years of term policy at $1.5 million which is way more than we need.

employer does another policy for free that is something like 2x my annual comp (also a large number)

 

[Funky Bunch]

The guideline is generally 10-12x your annual salary.

That is the range me and Mrs. 22* stay.

Twenty million dollars coverage seems a little excessive to me

 

[GarryO37]

Yup we have coverage for both of us set at 1million. So if either of us die, we want to be sure the other's set for a while to cover funeral costs, any debts, and children's college. Hopefully never have to use it. And supposedly we are on this "return of premium" plan so if we don't use it in 30yrs, we get our premiums back. Anyone ever heard of this?

Yes. I'm not sure how common it is for companies to offer return of premium riders any more, but they do exist. You pay a higher premium to have that rider attached to your policy. I would just make sure to cancel your policy at the end of that 30 years.

What I've seen companies do, is once the 30 years is up they keep your policy active and because your older they jack up the premium because you are no longer locked in to your 30 year term premium and you're 30 years older making you more of a risk. If you ignore paying it, have a new address and haven't updated it meaning you didn't get notification or you flat out didn't see your new premium that you have to pay, they will start drawing your premiums paid that they owe you once you cancel. A lot of companies do this, and the amount they take will most likely be enough to piss you off.

It's perfectly legal for them to do this. Please remember down the road what I have told you today.

 

[hawkifann]

I'm about 10x and wife is about 10x of what she was making before she quit working. If I died tomorrow, there's house debt to deal with plus kids college and things like that. I wouldn't want her to have to go back to work...or if she did, she'd need additional child care. Our needs probably won't change for a while, since our kids are 12, 9 and 4. 14 years until the last kid is out of the house and probably 18 until they're all clear of college.

 

[HawkeyeHitman]

You guys must be poor.

 

[artradley]

2M on me and 100k on the wife.

I have none on my wife. She does have a decent-paying job, but if she were to die my life would get WAY less expensive!

 

[Derekd3408]

You guys must be poor.

For having life insurance?

 

[INXS83]

Both my wife and I currently have 4x life insurance and we just had our 2nd kid not long ago. She thinks with 2 little kids now we need to increase our coverage. I'm curious how most people go about determining what is the right level of coverage to have. We have no debts other than the house (cars are paid off, no student loans, no credit card debt). And we put 20% down when we bought the house so assuming both my wife and I were to go, the house would just get sold and the kids would go live with my sister-in-law on the other side of town. We already have a will that outlines all of that. Any advice would be appreciated. Thanks.

I have several small old policies my parents and grandparents took out on me when I was a kid. I'm still paying one premium on a policy I took out on myself at 18.

As others have said, if you have no debt, 7 digits in assets and no kids left to put through college, you don't need life insurance. You are probably at 'critical mass'.

If you are the primary earner, have a mortgage, car payments, debt and a growing family, yes, you should get some term life insurance to cover the cost to bury you and maintain all family living and education expense for at least a year. After that, the widow can start hooking and sell the kids into slavery.

 

[Lone Clone]

Both my wife and I currently have 4x life insurance and we just had our 2nd kid not long ago. She thinks with 2 little kids now we need to increase our coverage. I'm curious how most people go about determining what is the right level of coverage to have. We have no debts other than the house (cars are paid off, no student loans, no credit card debt). And we put 20% down when we bought the house so assuming both my wife and I were to go, the house would just get sold and the kids would go live with my sister-in-law on the other side of town. We already have a will that outlines all of that. Any advice would be appreciated. Thanks.

None.

 

[aflachawk]

"Experts" habitually overstate how much you need. Everybody is unique so you have to do the math and make your own priorities. If you die tomorrow so you feel your wife should have enough money to go the rest of her life without working or remarrying, every kid can get six years of college without working or borrowing money? And do you want to ignore SS bennies because you don't trust they'll be around? Is so, you better get 15-20x.

Otherwise, since you probably won't die until your kids are grown, you will probably need far less.

Whatever you decide on, you should do this:

Compute the total you would need if you were to die tomorrow. Divide by four. Buy four term policies. Five year, ten year, fifteen year, and twenty year. As you get older your needs decrease, so every five years you drop a policy.

You assuming 25% of his needs will be gone every 4 years. Not a great assumption. Also your way is probably the most expensive. The correct answer is not to listen to any of the experts on HROT. Instead find a life insurance agent you trust and have them do a "life needs analysis". That's their job and what they are trained to do

 

[THE_DEVIL]

You guys must be poor.

No kidding.
If MRS_THE_DEVIL (no pic) can't live on the 25 mil in the various accounts we have then that's on her.

 

[MichiganManLifer]

2M on me and 100k on the wife.

Nothing personal toward you, but why do you tempt your wife? I wouldn't let her talk you into a cruise or hike near secluded cliffs/canyons if I was you.

 

[Hawk and Awe]

Just had my first kid and wrapping up our life insurance policy this week. We make about $200k together (pretty close to 50/50) and will have about $600k each after the new policy and what we get through work.

That feels like a ton of insurance to me. The only reason I was willing to go that high was because we're building a house mostly through debt.

I think to often people think of insurance as a reward (or apology?) for having someone die. It should only be there to maintain your current level of quality of life. I think paying off the house and getting started on college is all they (or we) would need.

 

[ottumwan in tx]

I am a life agent so its like the mechanic who fixes his car last i do have more than the average bear but probably less than needed

 

[artradley]

You assuming 25% of his needs will be gone every 4 years. Not a great assumption. Also your way is probably the most expensive. The correct answer is not to listen to any of the experts on HROT. Instead find a life insurance agent you trust and have them do a "life needs analysis". That's their job and what they are trained to do

The very last person you should take advice from is a life insurance salesman.

And my way is the least expensive. Term insurance for a young guy is cheap, and with my way you keep paying less and less.

 

[Derekd3408]

Nothing personal toward you, but why do you tempt your wife? I wouldn't let her talk you into a cruise or hike near secluded cliffs/canyons if I was you.

I'm worth way more alive than dead, I think.

 

[ottumwan in tx]

 

[MitchL]

2M on me and 100k on the wife.

I'd watch my back... if I were you!