Life Insurance?

Question

I have read many answers about term vs. whole life insurance. Maybe I am dumb, but I am still confused with all the options and blah blah blah. Here is my situation and please suggest what I should do as far as life insurance.
1. My husband (works for state, $60,000/yr) is the only one working.
2. We are both 32 years old this year.
3. We have 1 son (age of 1)
4. We own a house which is paid off (renting out right now)
5. We would like to purchase another house in the near future (1-2 years)
6. We would like to have another child.
7. I have a college degree so I can work if I want to in the future
8. We have a college fund set up for my son and plan to have him work to pay for part of his college.
9. We have Roth IRA and 457 for retirement. Not so much$$
10. My husband just wants to make sure that my child(ren) and I will have enough money if something were to happen to him.
Now, what should we do about life insurance? I know we will get other insurance (accidental).

I have tried to look for Financial Planner, but with no luck. It seems like I have to have to be millionaire for them to even look at me or return my call. I am leaning toward 20 term (should I get 30 term?) and $250,000 whole (assuming we won't have much obligation then, but just the final costs) with other insurance such as accidental, disability.... Is that about right? Any good insurance company suggestion? Any good financial planner suggestion? I so lost faith in them since I have had no luck. I don't mind letting them make some money off of me, they have to make a living too. But is it that hard to find someone honest?

Answer 1

OK, if he dropped dead right NOW, while the kids were young, you'd have a problem. If he waited until the kids were grown, you can go back to work - not much of a problem.

FWIW, accidental death is useless, IMO, for financial planning. It only covers SOME deaths, not all. If, heaven forbid, he developed cancer - it wouldn't cover.

I think at this stage of your life, 20 year term, renewable & convertable, is exactly what you need. You BOTH need to have coverage - because if YOU drop dead, he's going to need a nanny/housekeeper.

So get quotes from a LOCAL, INDEPENDENT agent near you - but $250,000 or $500,000 at your age should run you maybe $300 A YEAR. Each. And that would see you each through the "childhood years" and most of college, if the other guy kicks off.

Answer 2

Listen up.
there are three kinds of insurance agent/financial advisors.
Ones that work for themselves, better for the money to be in their pockets than yours.

Ones who don't know what life is about - therefore can't properly advise you even if that is what they want to do.

Ones that really can help their clients - because they are honest and understand life - not just life insurance.

You are looking for the latter, and it will be a search.

how do you find one who in going to take you in the right direction. Like everything else in life you must know a lot about the problem to find someone that won't do it to you.

Auto, home repairs, appliance repairs, you name it. It is a rough ride if you aren't informed.

this is the info - look for someone who has a similar opinion, tries to make u understand the options and doesn't give you a sales pitch. Let them talk first. The following knowledge should be in your pocket.

Life insurance is risk management, NOT an investment.

Permanent insurance is what you buy to last your whole life.
It takes many forms. I recommend a guaranteed UL policy for your stated desires. The value is determined by how much you think it will cost for final expenses when you reach your estimated life span. For you it is approx 85 yrs old.
My estimate is $100,000. A guaranteed policy means that as long as you pay the premiums the policy will not lapse regardless of the earnings of the policy. The illustration MUST show the cash value of the policy going to $0 and the death benefit continuing to age 100 and beyond. If the illustration does not go to age 100 ask for one that does. Generally, the premium payments stop at age 100. If you are told anything else - NEXT agent please. If the cash value does not go to $0 on the none guaranteed side of the illustration it means that you are paying too much premium and maybe the policy isn't really a guaranteed UL. Some companies don't have these yet.

Stay away from VULs and policies that are designed to build cash value. They aren't for you. The guaranteed UL will build cash until about age 65 then it will lose cash value. This is not a problem.

Term life is what you buy to cover "short" term risks. Mortgage, education, debt, Life continuation. Do the math.

Life continuation can require a high benefit unless you are reasonable. You should be able to get along just fine after the children are grown so you don't need to plan on it for the rest of your life (unless you don't know what else to do with your money). That is generally until they are 18. So a 20 yr term would probably be ideal.

Don't be fooled by a low price 1 yr term. or ART (annual renewable term) by the 4th yr it will cost you more than a 10 yr. by the 10th yr more than a 30yr.

Pick a company like Nationwide, Lincoln Financial, etc.

Finally, both of you need life insurance. The term might not be the same benefit, the UL will be.

Different companies have different costs, and you can shop if you want, but the agent is more important than a small difference in cost.

good luck

Answer 3

I do not have enough information to give you an exact answer to what would be best for you, however I will give you my best answer.

You both need insurance. He needs more on him but if something were to happen to you, he would probably some help with child care and that costs money.

I would imagine the wisest option would be both term and permanent for each of you.

30 year term would be appropriate and should be a large enough policy to incorporate the amount on the house you plan on purchasing, along with any car loans, credit cards or other debt.

It should also take into consideration the cost of child rearing because if either of you pass, the other will need help in raising the child.

Another factor to consider is if you want to fund college, or to provide a readjustment cushion to the surviving spouse.

A couple of permanent policies would also make sense. At your age I would look at a Variable Universal Life that would cover burial expenses and provide adequate coverage at age 62 when the 30 year term expired.

All this however, must make sense in your budget. If you can manage it, I think a combination of coverages makes most sense but I cannot tell you at what amounts.

I think as to a carrier, I think State Farm is a good place to look, they are the largest and most financially able insurance company. i.e. the most likely company to still be here in 50 years, and I also like the fact that they are not publicly traded so they are less likely to be bought or taken over by another company who could alter the terms of your policy.

Answer 4

How much will your husband earn over the next 20 years? next 30 years?

How long would you want to grieve if he died?

How long would it take you to get a job earning $60,000? or $50,000?

What if your husband became gravely ill but did not die?

It sounds like you have a good start on your finances but it is just a start. I suggest meeting with someone who can help you develop a comprehensive plan that will last over your entire lives (you, hubby and children). This plan will change many times throughout your lives as you have another child, you move and move again into new homes, as your children grow and as your income and savings change.

Keep in mind that you can own BOTH term and permanent life insurance. (I do).

I (socially) met a woman whose husband had died. They had a $1 million policy on him. Although she was a nurse (an in demand profession), she wanted to stay home and raise the kids. She spent most of the million before the kids went to college.

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Answer 5

Mbrcatz, Insuranceguytx, and Bill R all have pretty good answers. As far as the amount you need, a quick shoot-from-the-hip way to get this is to figure out what interest rate you could get investing a lump sum of money. Divide your husband's income by that interest rate. That will result in the lump sum needed to replace his current income at if you were pulling just the interest off. This isn't exact and that's why folks say go see a financial planner, but it's pretty darn good.

So let's say, you could comfortably make 8%...
60000 / .08 = $750000

If you were more comfortable making 6%....
60000 / .06 = $1000000

Good luck

Answer 6

Buy a 20 year term policy on each of you. Even though you don't bring in an income now if he lost you he would be a single parent trying to pay daycare, keep house, help with homework and do things with the kids. As a homemaker you cook food and do other things that would cost more without you. What do you think he would have to pay for the services he couldn't handle himself like daycare and maybe housekeeping plus things you could have taught the children but now he will need tutor or piano teacher or whatever skill will be lacking.
For him try to get enough to replace at least 10 years of his income you as a single parent may have to go to work, place kids in daycare and do two parents chores so not only replace his income but his services that can be replaced by money like gutter cleaning that you may not be able to do it all yourself while raising kids.
I would start with 500K-1,000K each minimum it isn't expensive for healthy young adults because nobody thinks you will die by 50.
Also make sure you get a good will naming what you want done with the children if you both die, who would get them and who would hold their money it doesn't have to be the same people, one of you may have a great person with a great heart but no money sense but someone else good with money who doesn't deal with children well.

Answer 7

Term insurance -where insurance is purchased for a specified period (typically a year, or for level periods such as 5, 10, 15, 20 even 25 and 30 years) where a death benefit is only paid to the beneficiary if the insured dies during the specified period. on survival nothing is payable Permanent life insurance is a form of life insurance such as whole life or endowment, where the policy is for the life of the insured, the payout is assured at the end of the policy (assuming the policy is kept current) and the policy accrues cash value.

Answer 8

Based on your details given,both of you seem to be quite responsible & committed to your family. As your hubby is the only breadwinner, it would be best to insure his life on death,total permanent disability & critical illness coverage as these are the unpredicted events that can happen to anyone.
I would suggest him to buy life insurance rather than term because the premium rate will be "locked" in. Life insurance is just like buying a property; it cost more money to buy & own a property compare to rent a property which is cheaper at the start but cost more over the long run.

It would be best to do a financial health check to find out your priority & financial concern then work out the expenses involve if any of the above event happened to your spouse.
Death is not the main issues as it only involve the cost of your child education & the family living expenses.
However, in the event of total & permanent disability or upon diagnose of critical illness it would mean that the family need more expenses for the treatment & medication cost.

Not forgetting that you take care of the family & child, you must also buy life insurance rather than term insurance on your life if you can work out the budget. This is because the 3 events above can also happen to you. Thus, if you are not insured it would result financial difficulty to your family due to the increase expense on medical treatment costs. Your spouse may need to hire a maid or nurse to look after you , take care of your child, do the household & cooking. It will increase your monthly expenses. Thus, both your spouse & you need to be insured well.

Pls take note that most life insurance cover total & permanent disability but the loss of one limb is not consider total & permanent disability thus no pay out from the life insurance.

4 years financial service consultant, FHC practitioner

Answer 9

Because you guys only have one income, I would suggest term life. It is cheap. You guys sound like you're pretty responsible with your finances so you probably won't need any of the cash value benefits that a whole life/universal life policy would give you.

Personally, I have one of each. My whole life I bought in my early 20's so it was cheap and those rates are locked in forever. The bulk of my ins is in term and that is so that I can buy more for less.

I would suggest a policy that would allow you to at least stay home with the kids until they are school age. That would be...what...10years?

Answer 10

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