My husband is a physican. Is it normal to have a one million dollar life insurance policy?

Question

I am his wife and was advice my our financial planner to have a one million dollar policy so that I could pay off the mortgage (~350K) as well as car payments and the like. This does not seem excessive to me, but my husband is now furious. I have been married to him for nine years and he brought it up tonight for no reason.
My father, who also was a physician, died last month and left me three million dollars in a trust fund. So I have my own money, plus I have my own 401 K (95 K) and my own brokeragge account (120K).
Is my husband wrong to be so upset about a silly one million dollar life insurance policy????????
Thanks-

I am the "cheap" husband, according to one answer.
A few things my wife forgot to mention: She quit her job last year, so her 401 K and the like...they don't accumulate any more money at this point, except to pay for the lapsed dental/health insurance we must now pay out of pocket for. Her trust fund ineritence: only 1/3 is hers in another 1 and 1/2 years, the rest after five more years after that. If my wife dies before then, the money goes to her aunt. So when she says she has money, she means she had saved money, she is referring to a financial pool we BOTH contribute to. So, yeah...why is she so keen on getting a million bucks for my untimely death when she has the money coming to her in the next several years? Is something going to happen to me between now and then that I don't know about? Hmmmmmmmm......

Christ, all this thinking...I'm gonna go play some Guitar Hero III

Answer 1

I just love how everyone here knew exactly what amount and type of insurance you need with the little information that you provided.

You met with a financial professional who recommended $1 million of life insurance. If your husband make $200,000 per year and died tomorrow, the life insurance would replace only 5 years of his now lost income.

Do the two of you have GOALS that require large dollar amounts? If yes, $1 mil does not seem excessive to me.

Has he maxed out his retirement plans? Is her worried about being sued for malpractice? (if so, in many states, dollars INSIDE a cash value life insurance policy are protected against suits - ask an attorney).

Bottom line: if you don't like the advice from the financial professional, ask for more explanation or go visit another pro. No one on a message board can give you advice on such a complicated issue as planning your complete financial life.

Your husband may be upset because he thinks he will live forever and be a good provider. Buying life insurance makes him face the issue of his own death.

Good Luck

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Answer 2

It really depends on your personal situation and net worth really. Realistically no one on this board can answer you accurately without knowing your financial background and whatnot. If you make $250,000 a year and your spouse takes out a $1 mill, that only 4 years wages without all the funeral expenses. Or if you have a large estate or networth (IE: you own businesses or a pile of investments or something), and you are just protecting your estate from taxation, then $1 million might not be suspicious at all. If you're a stay at home mom with no income, no net worth, with no children and no debts or anything like that, $1 million might be a pretty big stretch, but as long as you can justify it really it can be done. If it's while life insurance you can justify it by saying it's going to be a tax shelter becuase you anticipate having a huge networth down the road. In the grand scheme of things $1 million's isn't a "HUGE" amount of money any more...yes for "everyday Joe's" it is, but it doesn't raise red flags as quickly as it used to. You're best bet is to speak with an insurance broker and see what they think...they'll be able to assess your situation and make sure that what you're applying for is justifiable and legit so it doesn't raise red flags. In your additional details you mentioned you never thought about income replacement. A Broker can do a needs analysis to take a look at what you need so you have a more accurate idea of how much you need so you're not buying too much and spending unnessassary money or buying too little and having your family suffer financially because of it.

Answer 3

Well first of all $500,000 is rarely enough. But it may be in your situation. For an illustration let's say your husband makes $200,000 a year like the other person said. A million dollar policy will last you five years as if he were alive, and that's without paying off the mortgage etc. This is of course assuming that you would continue the same lifestyle. However, if you have a 3 million dollar trust fund, depending on the details, I may not worry about life insurance on him too much. Maybe a lower amount like $500,000 would be appropriate here.

Jared Balis
http://www.utahinsurance.org
http:/www.myinsurancequotes.net

Answer 4

If you are thinking about using the $1000000 to replace his income, and you were able to manage that at 8% consistently, that would generate $80000 a year. Yes, this is an overly simplistic calculation, but you get the point. How much does he make in his practice?

Oh, he may also be suspicious of this planner if he sells the things he recommends. There are fee-only financial planners who have fewer conflicts of interest. They amount you pay for planning could be easily saved over the years you plan on owning that insurance policy.

edit: After knowing a little more about the future distributions of his wife's trust fund, I'm curious to know how the financial planner proposed to protect his interest in that money if she pre-deceases him. I'll say this, if the financial planner can't adequately explain how and why, move on. There are plenty of fee-only planners out there who can do a good job.

Answer 5

I DO hope you bought TERM innshorance and not some puff piece called Universal Life or Whole Life or ANY KIND OF Cash Value Life insurance.

But! On to the controversy. With ALL of the money YOU have, the FACT is a $1,000,000 policy on him is overkill (pardon the pun)

Why? Well, fact is YOU DON'T NEED IT. PERIOD.

You may WANT it, but you don't NEED it.

If your husband DIED tomorrow, (JUST a hypothetical) financially, would you CARE?

NO!

Why?

Because you already got all the money in the world in that trust fund.

I don't have ALL of the info I need here to fully answer this question but IF you do not have any liquid funds then YES a 1 million dollar policy is in order.

Put into a SAFE investment of say 4-6% a year it would yield you some $60,000 a year before taxes. WHAT is your monthly outlay for motgage, car payment, food, household expenses, ect? If MORE then $60,000 before taxes then you would need MORE life insurance. Don't forget the future tuition expenses for the kids.

A million bucks of life insurance is NOT that much for a person making say $250,000 a year IF that is your SOLE source of income after his death.

The FACT is, actuarily, you husband in not going to die, at least not soon. Life insurance is ONLY for the purposes of covering the fact of his lost income IF he should die prematurely. If he continues on as a Super Duper Pooper Snooper (or WHATEVER his specialty is) and puts sufficient assets away into the proper savings account, in 20 years of marriage you can DROP your life insurance policy and PUT THAT PREMIUM into the savings too.

SO! All in all, a million large in your case is actually a bit small. Tell him to get a grip on himself but don't be put out if he starts to check his coffee sweetner in the morning or if he starts checking under the hood of the car before leaving for work. Large limit insurance policies can have a paranoid effect on some professionals.

Answer 6

The 2 of you should see the financial planner again. Let him explain to your husband exactly what the million dollar policy is for. A million dollars in of life insurance is not silly, it might not even be enough.

Can't really understand your post, but if your financial planner is not his and yours is advising you to get the life insurance policy on him. Then yes, he should be upset.

Reference to the post before mine. If you have more that 3 million dollars and your husband is a physician without knowing the rest of your financial picture then it would probably be advantageous for you to have some life insurance for the rest of your lives.

Answer 7

More importantly, his student loans. If he still has any student loan business, and you're in a community property state, likely YOU could end up paying off his student loans if he kicks off.

No, a million bucks doesn't get you as far as it used to.

BUT. Emotions aren't right or wrong, THEY JUST ARE. He's upset about this. You have to deal with the emotion, not the logic. I'd guess he's feeling insecure about this.

ON THE OTHER HAND. Are you going to NEED that million? If you can live off your dad's trust fund, what's the point of making your insurance agent richer by buying a policy you don't need? Can you make those mortgage payments out of your trust fund?? If you can't live off the procedes of a three million dollar trust (what, $150,000 a year, forever) an extra million isn't likely to help you out much.

Answer 8

I can;t speak for your husband, but life insurance is used to protect someone financially in case of the death of another person you rely on for financial support.

The question is - do you rely on your husband for financial support? And if so, how much money do you need each month to survive without your own assets included in the calculation?

Then, determine how much life insurance you need to generate the interest on that money that meets your monthly requirement for financial support if your spouse were to die.

It sounds like you are well off without his financial support.

He knows how much money you have on your own and may feel you really don't need it. Why not talk to him about it and explain how you feel and ask him exactly why he is upset over your life insurance policy.

Also, term life insurance is usually the least expensive, did you buy term life insurance? If so, good for you because it will be saving you a lot of money over the years.

I hope that helps! Best of luck to you and your husband.

Answer 9

If the mortgage is only ~350K, then unless the "car payments and the like" are over $600K, you do need one million dollars to pay them off.

In fact, the three million dollar trust fund should be more than enough to make the car, house, etc., payments, so no life insurance is really needed.

Answer 10

I have read to view life insurance kind of as retirement. If you have enough money to retire on, then there is no reason to have life insurance. Dave Ramsey wrote it in his book. I am newly married, and I am the main source of income. Threfore, I have life insurance because if I die, there is no way my wife would be able to live the same lifestyle as we do now. However, when I am 50 or so and have a lot of retirement saved and I die, then she would still be able to live on the retirement fairly comfortably. At that point, it would almost be a waste of money to keep paying life insurance.