What Type Of Life Insurance Should I Get?
Posted September 10, 2009 – 4:59 pm in: term life insuranceI am 33 and I’m pretty sure that I want to get term life insurance. I have a wife and 2 kids. It’s affordable. I’m in good health. My question is should I get a 15 yr plan or 20 yr plan? Money is a little tight so I’m thinking the 500K or 750K plan.
Tags: Insurance, Life, Should, Type, What
8 Comments
You need to decide what the reason is that you are purchasing the insurance.
The length of term and the amount is dependent on the reasons. If you are only making sure that kids get taken care of, how old are they? If they are 10 years old, you will only need a 5 or 10 year term (after that their old enough to fend for themselves). If they are infants, you’ll want something closer to a 20 or 25 year policy to make sure it covers them until they are old enough to take care of themselves.
If you are looking at taking care of debts, chose a term that covers the period of time it is expected to pay off the debts.
If you are looking at covering funeral costs, go with whole life, since that cost will not go away whether you die tomorrow or 50 years from now.
As for the amount, again, depends on the reason and the age of teh kids.
You’re best bet is to contact an insurance broker, they will be able to do a needs analysis with you that will help give you a better idea of how much you need and what product fits best. They will also be able to search the market to find the product that suits your situation best.
To Andrew: In my experience, $250,000 is barely enough to cover the expenses of childcare and education over time for one infant child, let alone 2, not even factoring in any debts that they may have. Which problem would you rather have: Too much money for the family or not enough and having them suffer? Better to make them mistake of buying a little too much rather than not enough in my opinion. It is impossible to suggest a proper amount or term without knowing more details about his situation, what the intentions are for the insurance, and what his family goals are and whether the insurance will help them acheive that.
You may want to lock-in guaranteed level rates for the 20 year level term life insurance plan with the option for convertibility to a permanent life insurance policy in the future. That would provide coverage for 20 years for your family with premiums that will remain the same each year, along with your coverage.
Also, the convertibility option will guarantee you can convert your policy to lifetime coverage by a specific date in the future.
This way you get the maximum coverage you need now for your family at an affordable price, and you get lifetime coverage for the future if you decide you need it.
Make sure you compare rates and plans from several insurance companies that are rated “A” Excellent, or better, by AM Best Company for financial stability.
Also, if you can afford it, consider life insurance for your wife, too. You may be able to get coverage for her cheaper than it would cost for you.
Best of luck to you and your family.
Go with a 30 yr term policy if you can. The premium is level for 30 yrs. That will bring you to 63 yrs old. You probably won’t need the insurance by then or if you do you can do a 5 yr term policy. With a 30 yr policy, it doesn’t matter what health issues come up, you have the policy. If you take a 15 yr policy, after year 15 if you have any health issues you can be declined for another policy.
What will happen to you over the next 50-60 years (OR longer)?
As the other answer states, what will happen to your health as well as your finances? What will happen to your obligations (debts) current and future?
Will you become disabled and unable to work?
Will you divorce?
Will you buy a bigger house and take on more mortgage debt? Will you become a partner in a business?
What is the likelihood that you will be sued for any reason?
There are a lot more questions to answer before ANYONE can determine what type and amount of life insurance to buy?
Term works very well as long as you die while it is in force (only 5% of term policies pay a death benefit) OR you accumulate enough savings to pay all your current and future obligations – even ones you can’t imagine right now.
I advise you to meet a financial professional, an insurance agent and an attorney to get all of your financial and legal affairs in order. Plan on meeting with these professionals many times throughout your life.
Keep in mind that you can buy multiple policies – a term and a permanent policy for different amounts.
Be sure you get coverage on your spouse too.
Good Luck
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You should probably have life insurance that will cover you until your children are out of the house. (And definitely go with term insurance.) You don’t say how old the kids are, but if the youngest is at least 5, then you could probably scrape by with 15 years of coverage. Does your wife work? If not, then also consider what her chances are for earning a decent living if you weren’t there. If she would suddenly find herself strapped with a huge mortgage or other debt and little earning potential, then you might want to cover yourself a bit longer for her sake (especially if she’s home raising your kids, and for that reason has limited earning potential).
When you’re deciding on the amount, sometimes just a little extra coverage can mean the difference between covering things just until your kids get out of the house, versus making sure your wife would be okay for the long term. (Of course, the life insurance would have to be appropriately invested for this to work!). Without knowing your income and your debt situation, it is hard to know if the amounts you mention are enough. You could use http://www.vilkri.com/life_insurance_intro.php to estimate your life insurance needs (and look at other areas of your finances too). Even if you absolutely cannot afford more insurance, it would be good to know if your numbers are enough, so that as your situation changes, you could make adjustments (perhaps taking out an additional policy in a few years, if your kids are quite young).
Good luck!
mrsdeli advise is good 30 yr term guarantee convertable but if you have to pick between 15 or 20 I say 20 by that time the kids are grown your 401 or ira are nice and fat your house is almost paid for make a plan and stick with it.
wow 500k or 750K
too much
lower your limit but make it longer time period,
life insurance is for the living not the dead
30 yr 250k
Take the 30 year term with a little bit lower death benefit.