my crazy life

Should I Buy Term Life Insurance?

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With the recent passing of my fiancee’s mother…and her subsequent life insurance policy squabble (we are not involved in it thankfully), I’ve been thinking….

do I need to buy life insurance?

With a wife now in the picture, and the 105K or so I still owe my mother, I think it’s worth looking into to. If something were to happen to me, I need to make sure that my debt to my mother is paid, and my wife is taken care of.

So yeah, I think it’s time to look at a term life insurance policy.

how much life insurance do I need?

That’s an interesting question. I’m 26 now, were something to happen to me, my fiancee could take care of herself, she has a college degree, but I’d like her to have a nice cushion, plus I’m sure we will have kids in the next 10 years or so.

I think a million dollar policy is about right for our needs. That would insure my mother is taken care of, as well as my fiancee/future wife.

How much will it cost?

That’s what I’m getting quotes for right now. I’m getting quotes for both a million and 1.5 million dollar policies with a 30-year term.

What I’m really hoping is that in the next 5 years I’ll have enough saved up, that we’d have our own “insurance policy” called a huge savings account fund. But, since that’s not a guarantee, and I’m not the risk-taker I used to be, insurance it is.

From the free quotes I could get, a million dollar 30-year term policy is going to run me around $650/year or about $54/month. Not too bad. I’m in good health, not overweight, don’t smoke, and no major family heath issues.

How much life insurance do you have? (I’m going to look into disability insurance next)

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  • http://www.thepennywisefamily.com jessica

    You might check with an attorney on this, but I think as soon as you’re married (since WA is a community property state) your wife also inherits ALL debt, so it would be more than just whatever is owed to your mom. I’d do whatever is owed plus 10x your annual income.

    For our family of four $500k each was good enough plus we’re setting up a special needs trust to ensure our youngest daughter always has health insurance available to her, even if something were to happen to my husband and I.

    A million might be excessive, but you’re a young guy, and if you’re in good health, you’ll likely get great rates, so may as well buy it now (maybe buy the 30 year term instead of 20 to lock in those low rates?). We only qualified for 20 year term (I had open heart surgery the year before I applied for insurance and that seriously messes up one’s insurance qualifications)

  • Chris

    Even if it is a joint property state, she is not liable for the debt. She didn’t sign for it. If you however move the debt or change the terms, she may become liable if her name is added to the note.

    On the insurance deal, you might decide to get 20 year term. You can pick up another 20 year policy in a few years once you have children. I have a large family and my initial policy just isn’t large enough now so I am adding another policy. This is due to needing more financial coverage than the length. The initial policy will end once the last one is more self sufficient which gets us past the early years where more care is needed.

  • http://www.moneymakingsense.com Ken

    I have 500K on myself. I am married with 2 kids. I think it’s sufficient but I will review my situation once a year. Do wait until you get married before getting the coverage. Doing so before marriage means you’ll have to go through name changes and paperwork. Good Luck.
    BTW….I think 10X annual income is a good guide.

  • http://www.thepennywisefamily.com jessica

    I just heard Dave Ramsey talking about this today on the podcast from yesterday–he says that in 20 years you should be financially secure because you should have enough in the bank and your house paid off. He thinks that beyond that, it’s not cost effective.

    Honestly, I’m likely to keep life insurance a lot longer than I “need” to. For now our policy is super cheap, but if our price increase in 18 years is outrageous then I might rethink or lower the amount, but this is an area where I’m cautious.

  • http://www.thepennywisefamily.com jessica

    I should be clear–wife’s assets become part of the “estate” as do your debts, so to clear the estate debts must be paid. That’s what was taught to me–but as always, seek proper legal advise on this one.

  • Christian

    Only $54/mo for a 1 million dollar life insurance policy?!?!? Please tell me who your broker is! I am 31 years old (and in excellent health) and I pay $70/mo for a policy of $300k. I wonder if the premium is somehow based on location of where you live as I live in Los Angeles?