Kids as beneficiaries for life insurance

[Anonymous]

I have 2 kids, 1 baby & 1 toddler. My parents tell me that both I & dh should get life insurance & put 2 kids as beneficiaries in case anything happen to us. Do you get them? I am a bit interesred, but not sure how does it work. Do we pay monthly premium till we die, otherwise the policy will lapse. How much people pay monthly & how much policy should I get for the sake of my kids? Should I get term life or whole life? My parents hint at us that they are getting old, and they may not be able to help us to raise kids if anything bad happen to us financially & physically.

[Anonymous]

Term life unless and until your estate is enough to pay the costs of raising your kids. DO NOT make the kids the beneficiaries unless you want them getting that cash in their hands with no conditions at 18 or 21. An alternative is to pay the life insurance to a trust.

[Anonymous]

Two people are not typically listed on one policy, as far as I know.

Usually, the couple make each other primary beneficiary. In other words, you have your husband on your policy. He has you as beneficiary on his. It is highly unusual that you would both die at the same time, but there are clauses which can deal with that.

Suggest you reach out to an estate attorney and set up an appointment. They can give you more details, and set up a trust for your kids.

[Anonymous]

Yes, absolutely. Though if you are happily married, I’d say put your spouse as the primary beneficiary, kids as secondary. If you die together, the kids will be provided for. If one of you dies, the survivor will have money to help pay for a lifetime of lost wages.

Get term life, long enough to cover until your kids are out of college and/or your worklife is over. The younger you are, the cheaper it is.

I got a 25 year, $500k policy when I was 40. It costs about $40 a month.

[Anonymous]

Agree withPP, do NOT make kids beneficiary! For us, spouse is primary beneficiary, trust is 2nd. And yes, you could put your kids at 50% each (but as PP mentioned, do not so this!). For us, if we both died, per our will, kids would go to my sibling who would also manage the trust. Sibling is stable and trustworthy and loves our kids as much as her own.

How much: enough life insurance on you so that your spouse can stay in the house you are in now (won't have to uproot/change life in the midst of grief because the mortgage is now unaffordable), and cover private college for both kids. Enough for spouse to do the same. When ours were little, that was something crazy like $2 million for DH and $1 million on me (if he died, house and college paid for, if I died, college and FT nanny paid for). I worked very PT, primary job was taking care of kids. We did that through various private policies (worked with an insurance broker/friend), and through DH work (3xs salary came free, we paid for a few more times salary). As kids got older, we reduced the amount (no more paying for extra at DHs work), because we've saved for college, kids would no longer need a FT nanny, and our house has less than $200,000 left on the mortgage.

And don't let the broker convince you to buy whole life insurance, just get 20 or 25 year TERM LIFE policies. Whole life policy they will claim to be an investment in you, really, broker makes commission and you get screwed in fees and low returns on your investment.

Equally important if you do not have, is disability insurance for BOTH of you. This is very inexpensive, but if you get injured and cannot work, I promise that whatever your work covers you for is not enough.
Get a private policy - a real one, not talking about AFLAC.

[Anonymous]

Never list minors as beneficiaries.

[Anonymous]

Other spouse is the beneficiary. If there is no spouse, put yourself into a living trust and make the trust the beneficiary. You then use the trust terms to set when and how your children and their custodians can access and use the money. I’m a single parent. My kid doesn’t get outright access to money until they are 30. Before that, I have a financial trustee (separate from the guardian) to oversee money.

[Anonymous]

Anonymous wrote:Agree withPP, do NOT make kids beneficiary! For us, spouse is primary beneficiary, trust is 2nd. And yes, you could put your kids at 50% each (but as PP mentioned, do not so this!). For us, if we both died, per our will, kids would go to my sibling who would also manage the trust. Sibling is stable and trustworthy and loves our kids as much as her own.

How much: enough life insurance on you so that your spouse can stay in the house you are in now (won't have to uproot/change life in the midst of grief because the mortgage is now unaffordable), and cover private college for both kids. Enough for spouse to do the same. When ours were little, that was something crazy like $2 million for DH and $1 million on me (if he died, house and college paid for, if I died, college and FT nanny paid for). I worked very PT, primary job was taking care of kids. We did that through various private policies (worked with an insurance broker/friend), and through DH work (3xs salary came free, we paid for a few more times salary). As kids got older, we reduced the amount (no more paying for extra at DHs work), because we've saved for college, kids would no longer need a FT nanny, and our house has less than $200,000 left on the mortgage.

And don't let the broker convince you to buy whole life insurance, just get 20 or 25 year TERM LIFE policies. Whole life policy they will claim to be an investment in you, really, broker makes commission and you get screwed in fees and low returns on your investment.

Equally important if you do not have, is disability insurance for BOTH of you. This is very inexpensive, but if you get injured and cannot work, I promise that whatever your work covers you for is not enough.
Get a private policy - a real one, not talking about AFLAC.

We did this exactly!

Question about disability insurance though - I am a SAHM (kids are little) - could I get disability insurance for myself and then it would pay for a nanny if I was injured/sick?

[Anonymous]

You should absolutely have life insurance. Think about what you would want to cover if you died - mortgage, school, college? We have an HHI of approx $500K and I have a $2M policy and my DH has a $1M policy. I am the primary breadwinner.

[Anonymous]

Anonymous wrote:Yes, absolutely. Though if you are happily married, I’d say put your spouse as the primary beneficiary, kids as secondary. If you die together, the kids will be provided for. If one of you dies, the survivor will have money to help pay for a lifetime of lost wages.

Get term life, long enough to cover until your kids are out of college and/or your worklife is over. The younger you are, the cheaper it is.

I got a 25 year, $500k policy when I was 40. It costs about $40 a month.

Even if you are happily married, don’t leave all of your money to your spouse. Leave some of it specifically to your kids. You’d be surprised at how many kids end up with nothing after their parents re-marry.

[Anonymous]

I’m a SAHM as my husband took out enough term insurance that would cover our living expenses for many years. I’m the beneficiary and we have a trust for our kids if we both died together. My sister is the trustee as she would take care of the children.

[Anonymous]

Yes. Absolutely get life insurance and set up a trust with the children’s chosen guardian as executor.

[Anonymous]

Yes get insurance on both of you and get it sooner rather than later. I developed type 1 diabetes a couple years after we got life insurance and I am so glad I locked in my insurance rates before that happened.

[Anonymous]

Anonymous wrote:Equally important if you do not have, is disability insurance for BOTH of you. This is very inexpensive, but if you get injured and cannot work, I promise that whatever your work covers you for is not enough.
Get a private policy - a real one, not talking about AFLAC.

We did this exactly!

Question about disability insurance though - I am a SAHM (kids are little) - could I get disability insurance for myself and then it would pay for a nanny if I was injured/sick?

I don't think so, because disability insurance is meant to replace income from a paid job if you can no longer work at that job. Someone can correct me if I am wrong...

For all the women who work and plan to become a SAHM, get that disability insurance from work BEFORE you get pregnant! It really is inexpensive when you are young and healthy. Believe mine is $275 per year, with a benefit of $4k per month. Haven't worked where I got that policy from in over 17 years, but kept the policy.

[Anonymous]

This is OP. Thank you for all tips.

To summarize, it seems like that I & DH should get term life till my kid turns 21 (finish college). Policy amount depends on how much we need to cover for mortgage, school, college something like that, & mostly people do $500k, $1 million or more. And, I should make my spouse as primary beneficiary, trust is 2nd (with my brother as trustee) something like that. Do not let my kids get the $ until they are more mature, like 25-30 years old.

One big question, for term life, if I or spouse are still living by the end of term life insurance, let's say 20 years after, there's no value that we can get, right? Because it is an insurance policy, not an investment, right? And, I should never buy whole life insurance till we are like retirement age, right?