Comments on: Why I Bought a $500k 20-Year Term Life Insurance Policy and You Should Too

By: Lisa

Lisa — Thu, 01 Jan 1970 00:00:00 +0000

We have both term and whole life. We purchased the term when we first got married nearly 15 years ago. The policies are for only 125K. I wish we would have purchased much, much more. Now that I’m in my late 40′s, more insurance will be more money.

I think about insurance more than I did when I was your age. Those term policies were just a whim. We purchased 500K whole life policies several years ago, but by that time the monthly premium was $125/month.

Life is unpredictable and choosing life insurance products is not an exact science. Your plan is well thought out. Personally, knowing what I know now, I would suggest getting more insurance since your premiums are so low.

By: Tracy

Tracy — Thu, 01 Jan 1970 00:00:00 +0000

Good post on an important subject. We carry term life on both spouses because it would cost a lot to replace the work I do in the home for at least the next 10 or so years.

The plan is that I’d start bringing in income when the children were in school and that would go towards paying for their educations, so we took that into account in planning how much to insure me for, too.

By: Financial Samurai

Financial Samurai — Thu, 01 Jan 1970 00:00:00 +0000

PT – I think your move is a great call, since in 20 years, u should have your own nut already with less debt and won’t need it as much.

Did you look into whole life as well? So much bashing about whole life. Do you feel the same way?

Let’s say you were making on average $500,000/yr with no kids and in your 30′s. How much life insurance would you get on top of the $800,000 in life insurance you already have from the firm?

By: Dipankar Kuzzuk Subba

Dipankar Kuzzuk Subba — Thu, 01 Jan 1970 00:00:00 +0000

I have never ever bought life insurance because the idiot that I am, I always ‘tune out’ when insurance agents give their pitches. This list was more valuable than their presentation. Thanks.

See ya around at pb.com

By: Mr. Not the Jet Set

Mr. Not the Jet Set — Thu, 01 Jan 1970 00:00:00 +0000

I’m not familiar with PT’s situation (though it sounds like they’re doing great!), but for us, we did what you describe, Evan. As much as the Mrs. would need to replace my income if I were gone, I would need to replace her service if she were gone. I won’t put my foot in my mouth by attempting to list all that she does as a stay-at-home-mom (and consequently leaving out several unsung duties), but I would either be looking at hiring a cleaner, nanny, and personal assistant at a minimum, or I would be staying at home myself. With the latter, I would need to replace my income.

so we both have insurance. Term insurance.

Anywho – congrats, PT. What you’ve done is a big step!

By: Tom

Tom — Thu, 01 Jan 1970 00:00:00 +0000

Thanks for sharing, I’m pretty much in the same shoes and your post helps me make a more informed decision, especially now with a baby I don’t want to put it off any more.

By: Evan

Evan — Thu, 01 Jan 1970 00:00:00 +0000

“Call me ignorant or arrogant, but for me, it’s not necessary. If something happened to Mrs. PT I’d be able to handle all the expenses of raising our kids alone. In other words, my current budget does not rely on two incomes.”

I don’t think it has to do with ignorant or arrogant, and trust me as both of these adjectives I would expect myself to see them (ah bad joke).

The hole that I see is you not adding the expense of a nanny in. Regardless if you are spending $50K, $100K, or $350K/yr in expenses with having free child care (i.e. one of you) that number has to increase for day care, nanny service, maid, etc. while you may lose a car payment (maybe) you will need someone to help out when you are at your job during the day or at night.

After discussing how cheap these options are, how much would it cost to insure your wife for $250K? $20 bucks a month? Maybe. Just seems like a good what if plan for the price of going to McDonalds for a family of 3!

As always, I have some thoughts! Also wrote a post you might or might not find interesting about insuring a child:
http://www.myjourneytomillions.com/articles/buying-life-insurance-on-a-childs-life/

By: PT

PT — Thu, 01 Jan 1970 00:00:00 +0000

aa and Dan,

Thanks for swinging by and leaving your comments.

As for the 20 years, I’m comfortable with it because I will be self-insured by that point, regardless of the age of my children.

As for my wife’s insurance…she doesn’t have any. I don’t think it’s necessary for us. If something were to happen to both of us, the $500k policy would be more than enough for the guardian to take care of our children. Plus, there will be social security benefits AND our retirement savings. Plenty.

I agree though that for most couples that a policy on the second spouse would be necessary. Good points.

Call me ignorant or arrogant, but for me, it’s not necessary. If something happened to Mrs. PT I’d be able to handle all the expenses of raising our kids alone. In other words, my current budget does not rely on two incomes.

Even if Mrs PT didn’t work again AND we had the kids in daycare we could cover it. Not because we’re bank rolling, but because we stay under our budget by that much. We are really conservative with our income to expense ratio.

But just because I’m comfortable with this risk doesn’t mean the average person should be. In most cases I would probably advise two policies.

Tell me if you see holes in my theory.

By: Dan

Dan — Thu, 01 Jan 1970 00:00:00 +0000

well done – I too finally purchased term life earlier this year – almost 2 years after the birth of my second child (I know, way too late). Interested to read about your evaluation and purchase experience – I did mine online. I agree with the comment about your spouse’s insurance – particularly for a two income family like yours. However, even if one parent is home with their children, both parents should have life insurance. If the care giver passed away, the cost of providing daily care for the children would need to be covered.

By: aa

aa — Thu, 01 Jan 1970 00:00:00 +0000

If you plan to have a second child, 20-year term may not be enough…

And… what’s your wife’s policy? What if both of you die together in a car accident?