Road Bike, Cycling Forums banner
1 - 16 of 16 Posts

·
Registered
Joined
·
8,047 Posts
Discussion Starter · #1 ·
OK- now that my wife is working after taking a time out with the kids, we are discussing life insurance and disability. We presently have a term policy that pretty much covers the house if either of us checks out before it is paid off. Looking ahead, it only seems irresponsible not to engage in some level of planning for unfortunate events. We made some initial inquires into changing policies, and I wasn't particularly happy with the suggestions. We were recommended term policies (I forget the amount, but each was maybe twice the value of the house) until we both turned 80 and disability until we were of retirement age. Added up, it would cost $400/month-- which is about the combined cost of our present term policy. The disability made up a good chunk of the cost. To my mind, it is quite expensive.

As I see it, insurance should not be viewed as an investment, and term policies have no cash value anyway. I don't really see the need for life insurance after retirement age (when each of us will cease to contribute income to the household-- and we should have a livable nest egg that is worth something while we are alive). Disability does not need to be at the 100% level--- meaning each of us can run a bit of the risk ourselves.

I don't really want to be over-insured--- and that insurance is more for peace of mind (meaning, I really do not want to get our money's worth in terms of actual payout).

What is the general lounge consensus, and what is the percent of income that people earmark for these kinds of expenses?
 

·
Milk was a bad choice.
Joined
·
1,338 Posts
I'm sure they recommended term policies until you are 80 because that's a ton of money in their pocket. You really don't need to take out a policy that lasts that long. Presumably by the time you're retirement age, you will have paid your house off and have some sort of retirement money in reserve. As for the amount, the standard amount proposed by those in the business is around 10 times your annual salary. Whether that amount is necessary is another issue, but it would probably be a fair place to start with the pricing.

I just took out a term policy that will cover me til I'm 55, and it is quite cheap for quite a lot of coverage (far more coverage than I need now, but I was working under the assumption that we'll probably have kids one day).

I can't tell you much about disability, but look into 20 or 30 year term policies. They also have an option where you get back all your premiums at the end of the policy period if you haven't used the policy (i.e. died). This option is more expensive annually, but then you get back like $15 or $20 grand at the end.
 

·
banned from the museum
Joined
·
6,622 Posts
Twenty-year level term is what I got. That way, if something happens to me while the kids are still in the house my income is replaced. I shot for enough money to pay off the house and put the kids through college, and give my wife enough to live comfortably even with her making a modest salary. In 20 years the house will be paid for, and we will have enough money saved to not worry about that any more. My life insurance is less than $50 a month.
 

·
No hero that's understood
Joined
·
6,100 Posts
My Own Private Idaho said:
Twenty-year level term is what I got. That way, if something happens to me while the kids are still in the house my income is replaced. I shot for enough money to pay off the house and put the kids through college, and give my wife enough to live comfortably even with her making a modest salary. In 20 years the house will be paid for, and we will have enough money saved to not worry about that any more. My life insurance is less than $50 a month.
Exactly what I did.

Disability is covered through work policies (ST and LT)
 

·
"El Bwana"
Joined
·
4,399 Posts
My term policy expires after my house is paid off and my kids are out of college. (When I'm about 65.

Disability benefits are taxable when the premiums are paid by your employer or by you on a pre-tax basis. The benefits are taxed as ordinary income. You can decide what coverage is enough but my long-term disability is 66.6% of my salary.
 

·
Proud luddite
Joined
·
7,233 Posts
I used to work in the disability insurance field, and I strongly recommend that you sign up for disability insurance (both long term and short term) if it fits into your budget. Being healthy and then suddenly becoming disabled (via illness or injury....and consider injury seriously if you do a lot of bicycling) can be quite catastrophic for a worker. Having the disability benefits, usually between 60-70% of your salary, can help pay the bills, buy food, save your home and even keep your family together. I'm not exaggerating....disability can destroy your life if you're not prepared.
 

·
Captain Obvious
Joined
·
11,876 Posts
i have whole life policies and term life. i wish i just had gotten term life. the premium for whole life is not worth it at all from my experience. i have enough to pay off my house and put my kid through college. we have a little less on my wife.
 

·
Honey Smack!
Joined
·
7,966 Posts
tomk96 said:
i have whole life policies and term life. i wish i just had gotten term life. the premium for whole life is not worth it at all from my experience. i have enough to pay off my house and put my kid through college. we have a little less on my wife.
What's the cash value of your whole life? What is it going to be when you're 65?





Also to the OP, There are some new riders coming out into the market that let you add a Long Term Care rider to your life, but I'm not sure if it's available for term policies or not. It basically eats the face value of the insurance to pay LTC. Which if you're in the situation that you don't really need the death benefit anymore due to bills being paid, kiddo's out of school...etc then it's going to be quite a bit cheaper than having two sep policies.

Also Insurance is an investment can be quite lucrative. I would avoid some of the variable products out there right now, but I can set up a UL policy that will grow at guaranteed 4% until you need it, and then just cash surrender or take loans from the Cash value of the policy as retirement income. It all depends on what you're looking for in your long term goals. If you have any questions let me know. But I will say don't get a term to 80 policy, that's going to be ridiculously expensive, and rather pointless.
 

·
Low rep power
Joined
·
6,264 Posts
My wife and I have SBLI term policies (which are relatively cheap), and I have additional life insurance through my work. Once all of the real estate (and future weddings :D) are paid off, we'll let them lapse. I have long-term disability,and my wife probably should, as she's self-employed, but we haven't gotten that together yet.
 

·
Honey Smack!
Joined
·
7,966 Posts
innergel said:
20 year fixed term life with a value of 8-10x your current salary should be easily doable for $50/month if you are healthy non-tobacco user.

I pay like $640/year for dang near $1million. We pay $275 for my wife for $500k. She's younger and only works part time.

Shop around online. There are plenty of comparison sites. I used www.zanderins.com
Also check the financial ratings of your company, you want to make sure it's around in 20 years. Also look at the actual payout and make sure your rate is guaranteed. Most companies you are fine, but there are some of the cutrate ones that will do a graduated rate to bring you in, but your death benefit is usually lessened accordingly.
 

·
Good news everyone!
Joined
·
5,452 Posts
Life insurance? I figure it will be tough for me to care about much when I'm dead, much less my finances.


:p
 

·
Call me a Fred
Joined
·
16,999 Posts
I decided to not die or get disabled. So far it's working out good.
 

·
Call me a Fred
Joined
·
16,999 Posts
This post is dead and disabled.
 

·
banned from the museum
Joined
·
6,622 Posts
Jim311 said:
Life insurance? I figure it will be tough for me to care about much when I'm dead, much less my finances.


:p
If I were single, that's exactly what I'd have. Being the responsible (somewhat anyway) sort, I want to make sure my kids are taken care of. Hence the policy.
 
1 - 16 of 16 Posts
Top