To Life Insure or Not to Life Insure, That is the Question.

[davidmcowan]

My wife and I met with a life insurance sales person last night. We are both in our mid-30s, live active lifestyles and eat healthy with no real family history of major illnesses.

I was blown away by the cost of insuring just one person and now am considering insuring the two of us (TERM) until our children are adults, which would be at least the next twenty years.

I thought I'd make a shout out to you other simple livers and see what your opinions were on life insurance. Is it a scam or a necessity for families like mine? I read some article that thought you should have a minimum of a million dollar policy if you have a family but I thought that was pretty ridiculous. I'm trying to do my best to not fall victim to the "whatifs" that make you over insure but also want my family to be okay in the case of my passing.

Thoughts?

[reader99]

My own opinion on life insurance is that it should be enough for the surviving parent to have time to make the necessary transition from two incomes to one. Enough to live on forever would be overkill, so to speak. My own experience is that whole life is overrated and oversold. Term is far more affordable for the core need it fills.

[herbgeek]

If your wife has a means of supporting herself on her own, your need for life insurance would be greatly reduced from that million dollar figure. You'd just want enough to pay off debts and maybe college for your kids. Wait. By the time your kids are ready for college, that probably WILL be a million dollars.

I don't have life insurance as I don't need it. No kids. Hubby capable of supporting himself. No debts. A reasonable amount of investments for retirement. Its cheaper for my estate to just pay burial expenses out of our assets, rather than continuing to pay a premium.

Ever notice that the largest/grandest/tallest buildings in every city were (at least originally) insurance company buildings?

[redfox]

I just sent in two apps for life insurance, one of them for the amount of my half of debt pay-off, so my husband and could stay in our home. The monthly costs are low, and it's term.

[Selah]

Term insurance is much more affordable, and the younger and healthier you are when you take it out, the better. I would have a frank discussion with your spouse about what THEY would want for themselves and your children, should you pass away suddenly. Should there be enough to pay off the house, pay for college educations, and invest what you would have invested for retirement over the course of what would have been your working life? Or just enough for a funeral and to pay off the car and the credit cards? Or something in between? What is your wife's earning capacity now? If you were to die suddenly, would she want to go back to school and get qualified for a higher-paying career?

I am a BIG fan of life insurance for those with young families and those in the middle years. If you didn't have a spouse or dependents, of course, then it would be a different picture altogether. But I have seen enough sudden deaths of people (accidents and heart attacks) whose spouses are stuck with enormous funeral costs and medical bills, and no way to pay either. Remember, even a funeral home won't bury you unless they've got your check, and it can take weeks, if not months, for life insurance to pay out.

[treehugger]

Whole life, is a scam (in my opinion), but term life insurance is not, and makes a lot of sense for many people. Like others have said, there's no need to buy enough to ensure that your spouse never need work again, but rather to support your children to adulthood and make sure a spouse can cope in the aftermath of losing a partner.

And as for being in your 30s and healthy, things happen. I know this from experience and don't mean this as a pessimistic way of looking at life. My Dh was diagnosed with end-stage renal disease, suddenly, out of the blue, at age 32.

That said, like everything else, it's smart to shop around and ask people you know for opinions on good companies and appropriate $ amounts.

Kara

[Spartana]

You might also want to check out Dave Ramseys website for an explanation of the evil of whole life vs. term life. Part of it is an ad for his sponser (Zander) but useful info all the same. I'm single with no dependants so don'ty have life insurance but if I had kids I'd get it. Even with a spouse who is capable of earning a living, there will still be unexpected costs like childcare, medical and dental costs, home and car repairs and maintenance, yard care, etc... that might be hard to cover on a one-person salary with no one else to help out with those things - financially or physically. If you, or your spouse, dies, how much "work" do they do around the house that you or your spouse would beed to hire someone to do for you? Factor in those things as costs too. As far as being young, fit and healthy - well great, but remember that the semi truck that rear ends you doing 75 doesn't care how young or healthy you are.

[Stella]

With 5 kids and me a SAHM we have term life insurance for about $250,000 on both of us. We have no house payment and nothing but some small student loan debts, so that would carry us through for a while. I had a friend who's husband died and she didn't have life insurance and it was hard on her. She ended up losing her house. I think we pay $15 or so for each of us a month.

We actually have life insurance on the kids too, just enough for a funeral if necessary. That is I think $2-$3 a month per kid. Since I'd be a complete and total wreck if that ever happened I felt it was worth a few bucks to know that I wouldn't have to worry about money on top of that.

[lhamo]

Another factor to consider, that almost always gets left out of discussions about life insurance, is how social security survivor benefits would factor in. In our case, DH and I now have enough work credits that if one or the other were to die prematurely the surviving spouse and kids would get roughly $2000-2500 in survivor benefits up to the point the kids graduate from high school. That plus our work-based life insurance policies and our cash stash/investments/retirement benefits that would roll over to the surviving spouse are enough that we have not been worried about getting separate insurance outside the employer-paid policies. That being said, I am still planning to look into getting additional $500k policies on each of us just as an added safety net, as you never know what might happen with Social Security.

In my own experience, the social security survivor benefit was more than enough to cover my living expenses and gave my mom much of her income in the period after my dad died and before I went to college. My mom saved a lot of it, and that was basically my college fund.

I am curious as to what kind of rates you are being quoted -- two healthy 30 year olds should be able to get a good term policy for relatively low cost. DEFINITELY shop around, and be sure you are looking at term policies. WHole life is a rip off. And if anyone tries to talk you into insuring your kids, run as fast as you can in the other direction. Life insurance is there to replace the income of the parent or spouse so that the surviving family members don't suffer economically. It is not a lottery ticket on your kids head, or a consolation prize.

lhamo

[ICheer]

Life insurance (term) is a priority unless you have adequate savings and the surviving spouse has the earning potential to maintain the family lifestyle.

My 56 year old husband died 1 1/2 years ago from pancreatic cancer less than three months after diagnosis. Without his life insurance proceeds, our lives would have become a financial nightmare on top of grieving. With the proceeds, I was able to pay off the mortgage, which allowed me to stay at the job I love but doesn't pay a lot.

Losing my husband, my home, and changing jobs due to financial pressures would have been incredibly challenging.

Get the insurance (term). It's worth the peace of mind.