How much life insurance does DH need?

[Anonymous]

He's in good health, non-smoker, age 36.

We are having DC #2 in a few weeks and I can't stop thinking about what would happen if DH died suddenly and left me alone with 2 babies. I make $175K and DH makes $75K. Our big expenses are a mortgage of $550K and childcare costs for 2. No other debts.

DH has a $250K policy but no coverage through work or anything else. What do you think? I'd love to get some advice from someone who isn't in the business of selling me insurance.

[Anonymous]

Similar HHI and mortgage, two kids, spouse is stay-at-home. I have $2.5MIL policy, and spouse has $500K policy.

[Anonymous]

Standard recommendation is 10 times your annual salary, so $750k.

[Anonymous]

Anonymous wrote:Standard recommendation is 10 times your annual salary, so $750k.

Yes, but she needs $1.75MIL policy for her.

[Anonymous]

This is DCUM, so you will hear from a lot of over-insured people.

First, you should only buy term life, not whole life or any other stuff an insurance salesperson tries to sell you.

Given the $75k salary of the spouse being insured, and the $550 mortgage, I think something in the $600k range would be reaonable. That's probably the lowest I would go, but the caveat is I'm not an expert/financial planner. That way you pay off the mortgage and you can easily cover remaining expenses with your income.

If you go to $1m on your husband, that would be plenty, for sure. That would allow you to work part-time if you needed to following his death.

On your life with the higher income, I would go higher, $1m or more. If it was me. Because he would really struggle without your income.

[Anonymous]

Anonymous wrote:This is DCUM, so you will hear from a lot of over-insured people.

First, you should only buy term life, not whole life or any other stuff an insurance salesperson tries to sell you.

Given the $75k salary of the spouse being insured, and the $550 mortgage, I think something in the $600k range would be reaonable. That's probably the lowest I would go, but the caveat is I'm not an expert/financial planner. That way you pay off the mortgage and you can easily cover remaining expenses with your income.

If you go to $1m on your husband, that would be plenty, for sure. That would allow you to work part-time if you needed to following his death.

On your life with the higher income, I would go higher, $1m or more. If it was me. Because he would really struggle without your income.

Agree!

Enough to get your mortgage paid if something happens to your husband. This assumes that you will continue to work even if it is for less hours and earning less money than you are at the moment.

[Anonymous]

Anonymous wrote:This is DCUM, so you will hear from a lot of over-insured people.

First, you should only buy term life, not whole life or any other stuff an insurance salesperson tries to sell you.

Given the $75k salary of the spouse being insured, and the $550 mortgage, I think something in the $600k range would be reaonable. That's probably the lowest I would go, but the caveat is I'm not an expert/financial planner. That way you pay off the mortgage and you can easily cover remaining expenses with your income.

If you go to $1m on your husband, that would be plenty, for sure. That would allow you to work part-time if you needed to following his death.

On your life with the higher income, I would go higher, $1m or more. If it was me. Because he would really struggle without your income.

You sound pretty knowledgeable about this, could I ask you a question? For a mid 30's male in good health, non-smoker, about what do you think a $750,000 term policy should cost?

[Anonymous]

A different scenario -- $200k mortgage, DH makes $200k,DW home with two kids, $600k 401k (combined) and $150k liquid. How much insurance on DH? Any on DW?

[Anonymous]

i make 120K, husband 80K
we insured me for 500K and him for 250K. he has some health problems, so monthly payment is a little more

we just did term, 20 years, until kids in their early 20s.

we just really wanted to keep monthly costs down and have some extra money if one dies to pay down the mortgage.

[Anonymous]

First, you should only buy term life, not whole life or any other stuff an insurance salesperson tries to sell you.

Wrong you should have a combination.

[Anonymous]

Anonymous wrote:

First, you should only buy term life, not whole life or any other stuff an insurance salesperson tries to sell you.

Wrong you should have a combination.

Almost no one "should" have whole life-- tell yourself what you want, but don't cause problems for other people.

[Anonymous]

A different scenario -- $200k mortgage, DH makes $200k,DW home with two kids, $600k 401k (combined) and $150k liquid. How much insurance on DH? Any on DW?

I would have $2mm on the husband (or at least $1 million) and at LEAST $500k on the wife. If you had to replace child care and all the things for for DW at least, it would be substantial

[Anonymous]

Whole life is just a really bad annuity with lots of limitations and agree with PP that people shouldn't have it. There are better investment vehicles. The "Gerber Life Plan" is an embarrassment.

Term is the way to go. long enough that you could support the other spouse and children through college and paying off a house.

[Anonymous]

Anonymous wrote:This is DCUM, so you will hear from a lot of over-insured people.

First, you should only buy term life, not whole life or any other stuff an insurance salesperson tries to sell you.

Given the $75k salary of the spouse being insured, and the $550 mortgage, I think something in the $600k range would be reaonable. That's probably the lowest I would go, but the caveat is I'm not an expert/financial planner. That way you pay off the mortgage and you can easily cover remaining expenses with your income.

If you go to $1m on your husband, that would be plenty, for sure. That would allow you to work part-time if you needed to following his death.

On your life with the higher income, I would go higher, $1m or more. If it was me. Because he would really struggle without your income.

I'm the PP who wrote the above.

Re: price for $750k policy, wish I could give you good advice but I've only bought through employers with generous benefits (prices aren't comparable to private market). If I were shopping in the private market I'd call 3-4 companies and compare. Sorry I can't help more.

Re: families with one stay at home parent, if the SAHM or SAHD for whatever reason is unlikely to get a high-paying job at a moment's notice, you need to err on the side of more insurance for a given HHI, because it is totally catastrophic when the single breadwinner dies. So for example, the DW $125k + DH $0k family needs to buy more than the DW $50k + DH $75k family, in total.

Re: insuring someone with no income, it's a personal choice. In previous eras SAH was often a permanent choice after kids were born, but now it's more often temporary. At the very least, the possibility of the SAHM/D working in the future is an important safety net. Having an educated, work-ready spouse who stays at home is like an insurance policy in itself! So it's rational to insure a non-earner these days, sometimes for a lot. The more the SAH parent's future working possibilities feature in your future plans, and the higher their earning potential, the more you should insure them.

Re: buying lots of insurance when you are married but have no kids, this again is personal. Are you young? Would you remarry? Would you stay in that big house? The reason insurance with kids is so important is that you never want your spouse to be "forced" to remarry in order to support the kids, like in the 18th century! Without kids it's really more about age, what-ifs, and lifestyle choices. And if you are single, then it depends on your parents' needs in old age, and so on.

Re: whole life and its ugly cousins... as others have pointed out, this kind of product is routinely marketed to people for whom it is a bad idea: the middle class and working class. It was invented by insurance companies trying to juice their returns and capture some of the investment market. If you are very wealthy, maxing out all available savings plans (401, IRA, 529) and ALSO making the maximum gift to your children every single year, and you need additional tax-efficient transfers to your kids before your death, then maybe whole life is an option. For everyone else, you are better buying term life and investing your money some other way, like ETFs in a 401 and IRA.

If you feel like you can't get the straight goods on all of this from insurance salespeople, go to a fee-only financial advisor.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This is DCUM, so you will hear from a lot of over-insured people.

First, you should only buy term life, not whole life or any other stuff an insurance salesperson tries to sell you.

Given the $75k salary of the spouse being insured, and the $550 mortgage, I think something in the $600k range would be reaonable. That's probably the lowest I would go, but the caveat is I'm not an expert/financial planner. That way you pay off the mortgage and you can easily cover remaining expenses with your income.

If you go to $1m on your husband, that would be plenty, for sure. That would allow you to work part-time if you needed to following his death.

On your life with the higher income, I would go higher, $1m or more. If it was me. Because he would really struggle without your income.

You sound pretty knowledgeable about this, could I ask you a question? For a mid 30's male in good health, non-smoker, about what do you think a $750,000 term policy should cost?

You could onto insure.com and get price quotes (if you aren't really shopping you can use an email address reserved for spam, and fake or google voice phone).

Term life is a commodity-- it's very comparable and the internet isn't a bad way to shop for it with 2 caveats: 1) for some particular conditions or risk factor (like a family history of cancer) some companies may have different underwriting policies, so an independent insurance agent may be able to steer you to a cheaper policy; and 2) you want to get a policy from a solid company (financially high rated), not solely the cheapest, so they are there to pay you if needed.