Another point- what if one of you dies after a long illness where you couldn't work and racked up huge medical bills? You could potentially leave behind hundreds of thousands of dollars in medical debt. What if the surviving spouse had even had to take a leave from work to care for the ill
This is very valid. Also a good reason to look into long term care insurance. Some of the also come with a death benefit. Sent from my SPH-D700 using proboards
Another point- what if one of you dies after a long illness where you couldn't work and racked up huge medical bills? You could potentially leave behind hundreds of thousands of dollars in medical debt. What if the surviving spouse had even had to take a leave from work to care for the ill spouse?
Another point- what if one of you dies after a long illness where you couldn't work and racked up huge medical bills? You could potentially leave behind hundreds of thousands of dollars in medical debt. What if the surviving spouse had even had to take a leave from work to care for the ill spouse?
I would say life insurance is a poor choice to hedge against this risk. What if you are really sick for a long time, can't work, run up huge medical bills, and the don't actually die? Good health and long term disability insurance seem like better choices for financial risks like this that aren't directly caused by, well, dying.
Another point- what if one of you dies after a long illness where you couldn't work and racked up huge medical bills? You could potentially leave behind hundreds of thousands of dollars in medical debt. What if the surviving spouse had even had to take a leave from work to care for the ill spouse?
I would say life insurance is a poor choice to hedge against this risk. What if you are really sick for a long time, can't work, run up huge medical bills, and the don't actually die? Good health and long term disability insurance seem like better choices for financial risks like this that aren't directly caused by, well, dying.
What is your suggestion for this then? Not being snarky.
I would say life insurance is a poor choice to hedge against this risk. What if you are really sick for a long time, can't work, run up huge medical bills, and the don't actually die? Good health and long term disability insurance seem like better choices for financial risks like this that aren't directly caused by, well, dying.
What is your suggestion for this then? Not being snarky.
We have long term disability insurance policies which pay our full salaries if we are unable to work. Obviously it won't help with medical bills that aren't covered but we both have access to good insurance so the scenario of us both losing insurance seems unlikely. Not saying this replaces the life insurance need but to answer the question in the sick but not dead scenario.
I don't think that it is necessary to fund some of the lifestyles described here, at least it wouldn't be in my case. I don't need to leave my child enough money to go to medical school and have a trust fund and all that. That's not stuff we'd do if he/she was alive, so it isn't necessary when we're dead. We pay almost $50 a month between us to each have a 150k policy, so I can only imagine we'd be spending much more than that on 1M policies and hopefully we won't die so that seems wasteful to me.
I do think it is important to have a policy outside of work, for reasons already listed. Realistically if DH or I dropped dead tomorrow, our work insurance would be enough to bury and have a nice funeral, pay expenses while grieving, sell the house, pay off some SL or car debt, etc. But on the chance that one of us loses our job or has a long term illness that means we don't work there anymore, I don't want to be stuck with nothing. Right now with private plus work insurance, either of us would have plenty of money available to pay off joint debt and start over comfortably for a while after the death. I imagine we'll bump up the amount if/when we have kids but likely only enough to make up for lost income.
Although now that I think about it, 20 years of my salary is about 1 million (seriously? lol) so maybe that's not that far off if I had a baby and wanted to be able to put him/her at least part way through college. Hmm.
DH and I don't even have kids yet, but we both have life insurance through work and separate policies. I'm not understanding how you can think that life insurance isn't worth getting. It's so absurdly cheap compared to dealing with the unthinkable down the road.
I think that pps have brought up excellent reasons. What if one of you can't work any longer and become uninsurable? For $750k and $1 mil term policies, my H and I pay LESS than our cable bill every month. There is no good reason NOT to have it IMO.
We have enough insurance to supplement income for 10 years. It was important to me to be sure we could keep our nanny, since being a single parent is so much harder. Also, I wouldn't want either of us to have to sell the house to get the equity out.
There's nothing wrong with self insuring yourself - in fact our financial planner recommends it at some point - but it doesn't sound to me like you're there yet. I would never rely on an employer policy. If you have a prolonged illness and lose your job, then you lose your policy. Employer policies really only protect against the freak accident.
Post by MixedBerryJam on Nov 20, 2012 23:51:16 GMT -5
The greatest gift my husband gave our family was a life insurance policy. We owned our house outright, but we did calculations that included what it would cost to pay to have a nanny, housekeeper, pay tuition (their hs tuition alone is $20k combined, and they were in middle school when he died), pay day-to-day living expenses, and got a policy to reflect that number. I planned to go back to work at some point, and still actually do plan to go back, but at 56 I'm not sure what my prospects are in all honesty, but even if I decided to go back, my stress threshold is so low that the first real challenge I had on the job would probably send me running home. Also, don't forget how expensive a funeral can be: We had the simplest possible service for my husband, which included a cremation, and still had a $7k bill at the end.
I don't know what you mean about the kids' money getting wasted quickly: this is not a function of life insurance but rather the executor or guardians.
Also, keep in mind that while you have a tidy sum in savings, if it's in retirement accounts and you need it before 59 1/2 that's a whole 'nother level of complexity adding to an already indescribably difficult situation.
ETA: And just to clarify, when I say we calculated to cost of nanny and housekeeper, it's not that we have one or that I think it's a necessity. But if one of us died the other one would presumably still be working, and so we thought of housekeeper and nanny as the cost of maintaining the day-to-day stability in my kids' lives.
We both are maxed out on life insurance through work plus other insurance. We want to make sure that if anything happens to us the spouse and/or the kid is provided for as much as we can. Losing a parent/spouse is so rough we want to make sure that financially we can do all we can to help. I lost my dad when I was 16 and my brother was 13. My mom was a manager at McDonald's. We would have lost everything without a good insurance policy. We are not willing to leave anything up to chance.
You are healthy now but what about in 5 or 10 years -- what if you were diagnosed with cancer --- then your ability to get life insurance is very hard and VERY expensive.
Get it now, while you are healthy and PRESERVE your ability to carry life insurance down the road. I personally think life insurance thru a co is a waste unless you will FOREVER be with that co -- and nobody can predict the future.
You're the only one who can answer this. For us, I'd say we definitely don't need one if our networth is at least $2M.
... if your net worth was at least 2 m then you would probably still be getting one for tax reasons.... many people who have that kind of net worth take out a life insurance policy to just help pay for the estate taxes when they die.
I do agree that life insurance is a personal decision and boy I sure wouldn't want to be fucked over and need a policy when I am 35 but cannot get it now b/c I have a disease or my sibling died from a disease --- all those things matter when calculating your annual premium and figuring out which level/status you are classified in based on your health and family history health.
I'm pretty amused at some of the numbers people are throwing around here. $1M is more than we intend to spend on our entire family over the next 18 years.
I don't understand what the 18 years is all about. Children don't magically stop needing you at age 18.
My parents are not wealthy by any stretch of the imagination, but they have provided support at critical times of my life. When I graduated college, I lived with them for over a year while I paid off some student loans and established some savings. They could not have afforded to give me money to rent my own place, but they did have a house I was able to live in practically for free. This alone would not have been possible if they had both died when I was younger.
You may not spend $1M total, but it can cost up to that much to replace you. Just thinking of the things I do for "free" for DD every day, like pick her up from school and make her dinner while DH is still at work, for example, and if I were suddenly not around, DH would be paying someone at least $17-$18 per hour to do all of those things every evening.
I think this is foolish we both have term policies. 1m on me and 2m on dh. We calculated enough to pay off the house and cover a full time nanny if I go and education for the kids if dh goes.
Also who do you think is going take your kid in if you both go? Raising kids isn't cheap. I want the guardian of my children to use my money to buy a bigger car or house if needed as well as provide my kid with things I want them to have like music lessons and overnight camp
I'm confused about why everyone mentions insurance from work not being worthwhile in case you have a prolonged illness. My DW was thinking of adding more through her work and I was worried about this, having read it on MM. But she showed me that the policy specifically says that if she becomes disabled the life insurance remains in place even though she's no longer working. Sure, if she gets laid off or quits before she becomes sick that's a different ball game, but long-term illness won't affect the insurance.
I definitely don't think everyone needs term life insurance. At some point, one's net worth may be more than enough to take care of family in case of death.
However, personally, $500K of total net worth is not there yet. Especially when part of that is tied up in retirement accounts that are not accessible without paying fees, penalties, and taxes.
You might be right that if one of you died, the other could support the lifestyle by working, but what if you both die?
I don't have a set threshhold, but personally we would need a seven figure net worth before I felt comfortable not having term policies. And once net worth is high up in the seven figures, we might revisit LI in the term of whole life anyway for estate/tax reasons.
My uncle passed unexpectedly a couple of years ago, and thanks to the life insurance, my aunt had the flexibility to quit her job, sell her house, move closer to her family and take some time away from work. She needed all of that for her own well being and for her son (who was only 10 at the time).
Others have said it all, but I'd want the security of knowing that there would be no financial stress or worry if one or both of us passed. We only have it through our employers now, but we don't have children. As we've been TTC, we've started to look into private plans for both of us.
It is entirely possible that you are one of the rare families that don't really need life insurance. Without knowing your situation it is really hard to say.
For our family it would be hard, really hard to do it one of passed away. We both work and we need both incomes. Our life insurance would mostly cover supplemental childcare for about 10 years and would help pay down housing costs.
I was widowed earlier this year very unexpectedly at 27.
You need life insurance.
We were DINKS (dual incomes, no kids) and very, very conservative with our money. So you think we wouldn't need life insurance...but almost every widow I've met that's younger has to be very careful with her money, including myself.
I can't tell you how many things I've had to pay for that took me by surprise and how incapacitated grief can make you. I literally have to pay ppl to babysit me to get me through the days sometimes. It's horrible.
Get the life insurance and I hope you never, ever have to use it obviously---but if you do, at least you have it.
Also keep in mind that someday you MAY want insurance and have missed your chance. DH was healthy as a horse when we married and in the 6 years since we've discovered a genetic risk of aneurysms and he had cancer twice. He'd never qualify for affordable coverage if he tried now. He was super low risk when he bought it, thankfully.
1mil sounds like a lot but it could go faster than people think. I'm a SAHM now and I'm confident I could maintain our lifestyle for 10-15 years with that much, but not with a ton leftover for college costs. Money always sounds like more when you don't need it, and death always seems unlikely until you're sitting in the cancer center, pregnant, with a toddler at home... Just sayin.
Incogneato, how is your husband doing? If you don't mind my asking.
Also, I just can't stress how right you are. Oh, my God, how right. I realize everyone is in a different place in their lives, but it boggles my mind that people think they don't need life insurance. You're right, you (not you-you, general-you) might not need it today, but what if you need it tomorrow and can't get it then? Your situation is exactly why we get life insurance when we're healthy. I woke up one morning thinking my husband was giving me the silent treatment, and 6 hours later he was a cancer patient, and seventeen months later he was dead. I cannot fathom where we would be now if he didn't have life insurance. I may have said this already in my previous response, but his life insurance enable me to be in a position where I could, literally, write a check tomorrow to pay for 4 years of college for both of my kids. That's exactly what he wanted the life insurance for.
Everyone has focused on illness, but it's probably just as likely one or both of you could be in an accident and end up racking up emergency room bills before passing which could also wipe out money you think you're leaving.
As the named guardian for a nephew, you bet the first question I asked was what kind of insurance our sibbling had on themselves. If they pass away before the kid is 18 there will be after school activities, school trips, school fees, school supplies and clothes and after school care and who knows what else that we haven't planned/budgeted for. We would be counting on the life insurance to fill that gap and then hopefully the other assets could be slowly given to the child after 18 to pay for university/getting started/whatever.
I suppose if my sibbling and spouse were killed in an accident I'd also be looking at bills for counselling for the child and new family unit to help all of us grieve/adjust. because I would have no idea what to do.
We opted not to get life insurance. H and I are both high income earners and we have no kids (and will not have any). We have savings and some insurance through work (two times our pay). Our goal was to have enough insurance through work so that we could take a year of our life to get settled (whathever that would mean) and the savings we have would help more in the long term. Statistically speaking, we're more likely to get divorced then one of us is to die.