Now that I have a wife and two kids, I’m looking into life insurance options. Neither I nor my wife have life insurance at the moment. Would like to hear what the general consensus is from leasehackrs. Is life insurance a no brainer? If so, what kind of policy (term/whole, at what age will policy expire, total coverage)? What kind of factors weigh on your decision making (family medical history, current net worth, etc)? Some details:
Male, 40 years old
Non-smoker, drink once or twice a month
Kids ages 2.5 and 1 years
Absolute no brainer. You need enough to be able to cover your wife and kids expenses and lifestyle for the next 17 years (or until she replaces you) should you pass away suddenly. Does you wife work? If she does, would she be able to continue working as a single parent? Would her income alone be enough? If she doesn’t work, how would she afford expenses for the next 17 years? Would you want her to be able to pay off the mortgage immidiately so she doesn’t have to worry about it? Do you have daughters and do you plan on paying for their weddings when the time comes?
These are all the questions you need to answer to determine how much you need to purchase. Many don’t like thinking or talking about it but you don’t want to out a burdon on your family.
Family history doesn’t matter, you could be hit by a bus tomorrow.
Buy term, invest the rest. Whole life is a shitty ROI, especially if you don’t get locked in young.
Term is kind of crappy if you don’t get locked in young as well. By the time most people are in their 40s their health metrics start to really suck… and the costs go up a ton. Oh, and don’t smoke cigarettes or do recreational drugs before you lock in the Term. Even legal recreational marijuana use will dramatically impact the premium.
Someone in their 30s can get a ridiculously cheap policy that I recall can have a modification for a higher pay-out without a new medical exam.
No, it’s not a hard cliff. I’m just saying men start hitting a “balding, fatter, ate too many donuts, slowing metabolism, kids interrupting their sleep, can’t exercise because work sucks, too much Wendy’s Nuggies, drinking lots of beer, and life burdens grind your soul to a pulp” health profile in their 40s.
You should shop it arond or find a broker that can do it for you. Rule of thumb for the bread winner is to get 20 years income (or enough years until the kids are out of school) or a mix of 10 years income, mortgage balance and cost of all kids tuition. Put at least 1/2 that amount on the spouse that makes less than the primary income. However anything is better than nothing.
In reality only about 3% of term policies ever pay out. The ones that do are a huge blessing for the surving spouse and family.
In a similar position to OP and know basically nothing about this. I’m curious why the default recommendation is 20 years? Wouldn’t that recommendation vary substantially depending on the amount of separate savings a family is able to accumulate? As kid gets older there would be fewer years of support needed and the amount of savings available to provide that support would have increased? Big picture, is that the idea or am I missing something?