[‎‎USER]

M (37) and F (36) with kids 4 and 2 years old, gross income 110k and 430k mortage for 30 years. Planning to get a term life insurance.

Debating on the following:
1) 30 years $1M = 224$/month for both of us
VS
2) 30 years $1.5M by stacking (20 yrs $1M + 30 yrs $500K) = 239$/month for both for us

Would appreciate any input, many thanks!!

[Michelle]

30 years is a long time. What does 20 year rate look like? I have 3 years left on my 20 year term and don’t really need it at all anymore at this point.

Youngest is 15. Assets are high and debt is low.

[Matt]

You probably don’t need that much, that long. If one of you died, you should expect life to change for a bit, then change again. It’s not unlikely for Brady Bunch to happen, etc.

A project manager would do the amount as = ($Optimistic + 4×$Probable + $Pessimistic)/6.

Additionally, there’s no need to “profit” off insurance claim… your death shouldn’t make the person FI.

Consider mathing the costs the other is to cover over time (remembering invested money grows over time).

There’s also SS Survivor benefits to take away needs, etc.

[Ahmed]

I recommend looking at convertible term. Having the option to convert to whole life in the future is a great benefit.

[Michael]

Just another thing to consider … The odds of being disabled permanently (or for a prolonged period of time) are much higher than death.

So, you may want to consider adding long term disability insurance while you are at it.

[Mark]

I like option 2, gives you more flexibility. You’ll have stronger protection while your kids are young (and expenses are higher), and then still have coverage later in life without overpaying.

For just $15 more a month, you’re adding $500K in the years you may need it most.

It’s a smart move if you’re thinking about mortgage protection and income replacement while the kids grow.

[Cody]

What’s the risk of you not being financially independent in 20 years?
Separately, that sounds too expensive unless you have very lower health ratings.

And are there any special needs considerations for your children?

[Garrett]

Were the same ages. I did 1 million 25 years and 500K 25 years for my husband (he’s a smoker so $$$).

I just did what I needed to cover paying off my houses, funding college, etc.

I think you might be able to get better rates than that

[Rick]

The flexibility of option #2 is desirable. For the obvious reasons but here is one talked about less than others.

Instead of income replacement or liability coverage, term insurance can also become asset replacement.

Let’s say you amass $1M and think oh yeah I will leave the inheritance I want. And then lingering disease afflicts you. And you drain the majority of your net worth for your care.

You leave just enough to cover your burial or cremation. Little to no inheritance.

Keeping all or some of your term policies after your needs for income replacement or liability coverage allows your to shift them to become asset replacement insurance.

Not a need for everyone but for more I expect than consider it.

[Bill]

Stacking policies like that is great if you are on a FI path. Your insurance needs go down as your nest egg increases.

[Deb]

You probably don’t need that much insurance for 30 years. Your kids will be 32 and 34 and you and your spouse will be 66 and 67.

The main purpose of life insurance is to cover earnings if a person dies.

Your kids will likely not longer be dependent on your earnings after college and your mortgage will be close to being paid off by then.

Did you compare life insurance policies for 20 years?

[Eric]

Between those options I would take #2. They both seem really expensive though, unless you have some major health issues. I got a 20-year $1M policy at age 41 for $685/year

I don’t think it’s too much coverage as others are saying.

My wife is a SAHM and our logic is if I die we want her to still be home and if she dies I want to stay home, esp since it would be such a difficult time for the kids

[Joe]

Life insurance is all about replacing income that would be lost or extra costs due to the incident. So key question, for how long do you need to replace income for and how much?

If god forbid something happened today would $1m replacement be enough?

And 20 years in the future will the same replacement amount be needed? Probably not once kids are in / through college.

I personally stack policies to reduce overall coverage as kids grow and eventually stop 5 years after retirement (would stop at retirement as no income to offset, but extended in case of a downturn and had to go back to working)

[Nancy]

I like B. We did more like A. 18 years ago and only $500k. Thinking then was pay off house and car and person left has some time to fully work again.

Now that I’m older, I see how incredibly hard that may be, depending on kids ages

Now we are nearing the end of the term. We can do without but it would be nice to have “something” for the next 10 years that’s affordable. “For extras for kids”. Especially learning one has extra needs.

College costs that are much higher than saved for / anticipated.

I haven’t looked but I’m assuming it’s more pricey than it’s worth, at least for my husband and the stacking health issues

[David]

Seems excessive. Maybe 1/2 that for 10 years then half again. You’ll get Social security benefits if one partner dies.

My wife died when our kids were 1,3 and 5 and Soc Sec paid $3200 a month tax free til they graduated HS or turned 18 whichever was later.

If one plans to keep working, only insure the worker with a lot.

I kept working and while Nannies are pricy, money was the least of my problems with 3 kids under 6 and no spouse.

[Author]

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