Life Insurance?

[Anonymous]

I just received an offer for life insurance through my credit union. It got me thinking about what I currently have and if it's enough.

Right now, I have life insurance (3x my salary) through work and a $50K policy independent of that. My parents also have a small one to cover funeral costs, etc. All told, that's a little less than $250K.

I'm a divorced parent in my 20s, 4yo child, XH is not involved in our child's life by his choice. My parents are the beneficiaries of all policies to keep XH from getting access to the money, they have been instructed to file for custody or at the very least, grandparent's rights (XH is not a nice person and incapable of raising our child on his own, he would also cut my family off from our child in a heartbeat, he's already tried once). We've had multiple discussions about my wishes, my family is aware of and agrees with my concerns.

Do I need more? I want to leave enough so that my parents don't have to spend their own money protecting and maintaining access to my kid, plus I want some left for college (as XH and his family have already said they will not contribute anything to DC's college, no matter what).

There are multiple reasons DC is not my beneficiary and why I've told my parents to go for custody if I die, I don't really want to get into the dirty details. Is $250K reasonable? Or should I purchase more?

[Anonymous]

Anonymous wrote:I just received an offer for life insurance through my credit union. It got me thinking about what I currently have and if it's enough.

Right now, I have life insurance (3x my salary) through work and a $50K policy independent of that. My parents also have a small one to cover funeral costs, etc. All told, that's a little less than $250K.

I'm a divorced parent in my 20s, 4yo child, XH is not involved in our child's life by his choice. My parents are the beneficiaries of all policies to keep XH from getting access to the money, they have been instructed to file for custody or at the very least, grandparent's rights (XH is not a nice person and incapable of raising our child on his own, he would also cut my family off from our child in a heartbeat, he's already tried once). We've had multiple discussions about my wishes, my family is aware of and agrees with my concerns.

Do I need more? I want to leave enough so that my parents don't have to spend their own money protecting and maintaining access to my kid, plus I want some left for college (as XH and his family have already said they will not contribute anything to DC's college, no matter what).

There are multiple reasons DC is not my beneficiary and why I've told my parents to go for custody if I die, I don't really want to get into the dirty details. Is $250K reasonable? Or should I purchase more?

If you want to leave enough for the guardian(s) to raise DC and send him to college debt-free, you'll need more than $250K, so if the credit union pricing and terms are good, then yes, buy more.

More importantly re: beneficiaries, you need a will with a trust for DC's benefit. The life insurance proceeds/beneficiary should be the trust, not your parents. Your parents can be the trustees.

I don't know what would happen custody-wise but it is likely worth paying a lawyer for an hour or two of consult-time to discuss. I would imagine that your DC's father would have a good shot at custody. That makes setting up the trust that much more important.

[Anonymous]

I did meet with my divorce lawyer at the end of my divorce to hash all this out and write a will. I asked about trusts (because that's what I initially thought I needed to set up) and having my parents be beneficiaries.

He told me that since custody would automatically go to XH as the surviving parent, XH had a very good shot at forcing my parents off the trust and being named the trustee since he had custody. He said the longer XH is out of the picture of his own volition, the better chance my parents had of getting primary custody, esp since we lived with and are still close to them. Plus, at the time, I didn't have $250K, I only had $50K and the lawyer said it wasn't worth the hassle for that amount of money.

Also, if the money was in a trust, my parents couldn't use it on lawyers for a custody battle (which my lawyer absolutely agreed with me that they should file for grandparents rights at the LEAST if anything happened to me)

I'm not a lawyer so I don't know how much of that is valid, but it made sense to me at the time. I'm willing to rework things and set up a trust, I just don't know if that would be the best move.

I should add, I own no property and the only debt I have is $20K of student loans. So it's just the life insurance.

[Anonymous]

He told me that since custody would automatically go to XH as the surviving parent, XH had a very good shot at forcing my parents off the trust and being named the trustee since he had custody.

This is anonymous advice, worth what you paid for it: BALONEY. A properly written trust is bulletproof and should include very specific contingencies for alternate trustees in case your parents are incapacitated or die. A trust is a stand-alone legal entity and the ultimate beneficiary (your child) does not inform who the trustee is. You need a new lawyer.

[Anonymous]

250K to support a 4 year-old plus college is cutting it close, but not by a huge amount. At your age, I'd look at cheap 10 year and 20 year term policies to put you over the top, but not if you have to cut into the grocery money to do it. The DCUM's may howl, after all THEIR DC must have a stradivarius plus lessons blah blah blah. Do whatever you can reasonably afford.

[Anonymous]

I agree, you need more insurance. You also need a new lawyer and a trust. Who has custody of your child and who the trustee is are not related.

[Anonymous]

OP here. Thank you for the advice. Looks like I'll be looking at more insurance and setting up a trust. I do have to meet with a lawyer sooner rather than later to address some other issues, I'll add this to the list of things to discuss.

[Anonymous]

OP, I'm in my late 20s with a 3yo, also single. I pay $25/ month for a 30y term life policy for 500K. I pay another $35/month for a 10yo policy on my ex for 350K. My ex smokes and his parents died young so I could only afford a 10y policy at the time, but I plan to do another for 15-20y in a couple years, before he's 35 and rates increase. In addition, I have another $200K on myself through work.

I went through Accuquote and couldnt be happier.

[Anonymous]

Anonymous wrote:OP, I'm in my late 20s with a 3yo, also single. I pay $25/ month for a 30y term life policy for 500K. I pay another $35/month for a 10yo policy on my ex for 350K. My ex smokes and his parents died young so I could only afford a 10y policy at the time, but I plan to do another for 15-20y in a couple years, before he's 35 and rates increase. In addition, I have another $200K on myself through work.

I went through Accuquote and couldnt be happier.

How did you get a policy on your ex?!? I thought that I couldn't do that.

[Anonymous]

The ex has to agree in writing - you can't just go take out a policy on someone else.....

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, I'm in my late 20s with a 3yo, also single. I pay $25/ month for a 30y term life policy for 500K. I pay another $35/month for a 10yo policy on my ex for 350K. My ex smokes and his parents died young so I could only afford a 10y policy at the time, but I plan to do another for 15-20y in a couple years, before he's 35 and rates increase. In addition, I have another $200K on myself through work.

I went through Accuquote and couldnt be happier.

How did you get a policy on your ex?!? I thought that I couldn't do that.

PP is right, he has to agree. In my case, with his parents dying prematurely, I was able to make a good case for getting life insurance on him. The only reason I did a policy for myself too originally was so that he wouldn't think that I was targeting him specifically. Today, I'm glad that we both have policies, because I didnt realize that my policy through work was insufficient. Anyway, a colleague urged me to call Accuquote. I did and they set an appt to come by the house to meet with the ex and I and do the bloodwork, paperwork, etc. It was really convenient and the process was smooth.

If you have any contact with your ex, I would approach it as something necessary for the both of you.

[Anonymous]

Just wanted to add, don't assume that your ex will say no. I wasted time trying to wait for the "right" time to broach the topic. My ex was a complete azz at the time that I asked and I was prepared to persuade/argue any point he could make against it and he agreed rather easily. I pay the premiums for both of us so that it doesn't lapse.

[Anonymous]

I've been a financial advisor since 1998 and have a strong background in life insurance & investments. If you are at the beginning stages of getting quotes for insurance, the internet quoting engines can be a good place to start because they will give you some idea of the premiums. However, they are many issues you need to consider when buying any life insurance policy and the quote engine will not help you determine what type of policy is best in your situation. You may also run into underwriting problems if you apply for preferred for example and the insurance company offer standard or below. I always do a risk assessment with my underwriting team before quoting people so the quotes I give will most likely be accurate. My website is www.JimMusgrave.com if you want to reach me.

[Anonymous]

I have very, very little contact with XH (as in one email every 6wks kind of contact). But we're headed back to court soon for child support enforcement since he's so far behind, maybe I'll bring it up then.

[Anonymous]

Anonymous wrote:I have very, very little contact with XH (as in one email every 6wks kind of contact). But we're headed back to court soon for child support enforcement since he's so far behind, maybe I'll bring it up then.

Please do! My coworker that urged me to get life insurance on my ex had it included in her divorce decree. Her ex didn't want the insurance policy, fyi.