So in the last few months my wife gave birth to a house and we bought our first child. Or something like that.....either way, it seems like this would be an appropriate time to get some life insurance in case I/we croak.
Anyone have any advice on which company to go with or who to talk to? Is it better to talk to an insurance broker? If so, anyone have any recommendations?
What are things to look out for? How much coverage would one typically go for? I don't have mortgage insurance at the moment (it seemed like a total ripoff), so I would need my policy to be able to cover that.
Good time to get it, when we did ours we basically looked at it and figured out how much we'd need to pay off the debts (house, at the time car) and provide some money to pay for living for a while for one spouse if the other bought it. Not too extravagant so as not to incent spousicide though
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I would say look at a term policy. Basically you need more now than you will 20 years from now, or at least your needs will differ. Also only enough to cover debts may not be enough depending on what your spouse does work wise. You still need to consider future child care, maybe enough to help send your child/children to college. I know for myself with a lousy sub 6 figure income, I would have a tough time saving anything trying to support more than one child even without any debts. So if you are in an unbalanced earning situation....the one making 75 grand a year will need extra money when their regular CP spouse who makes 200k croaks.
At least you won't have to worry about jhunt taking your wife when you die. He'll want nothing to do with a woman who gave birth to a freakin house.
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I would say look at a term policy. Basically you need more now than you will 20 years from now, or at least your needs will differ. Also only enough to cover debts may not be enough depending on what your spouse does work wise. You still need to consider future child care, maybe enough to help send your child/children to college. I know for myself with a lousy sub 6 figure income, I would have a tough time saving anything trying to support more than one child even without any debts. So if you are in an unbalanced earning situation....the one making 75 grand a year will need extra money when their regular CP spouse who makes 200k croaks.
At least you won't have to worry about jhunt taking your wife when you die. He'll want nothing to do with a woman who gave birth to a freakin house.
That's a good way to look at it. Usually I would sit down and go through things, explain the options and basically go from there. Term in these situations makes a lot of sense though.
This may sound excessive, but in your situation I'd go for 2,000,000 in life insurance.
Basically having a young child indicates that you're likely 20's or 30's and life insurance is quite cheap at that age. Secondly interest rates are very low and assuming you want you/your spouse to have all the available options in the event of something tragic. This amount could be deposited in some no risk interest paying account at approx. 2.5% giving you about $50,000 per year in income.
This would likely be enough to allow one of you to stay at home with your kid in their younger years if you so choose, or cover child care costs and living expenses giving you flexibility.
After looking at insurance costs this makes sense to me, however you'll also need to decide what you are comfortable paying in premiums per month. Any broker will likely tell you that 1,000,000 is enough and it probably is, but do concider that while you are young extra insurance is not that much, and you will need more coverage the younger you are...
Look at 'Joint First to die' options if you go for a bigger number, this will lower your premium since your young kid won't need the value of two large policies if something happened to both of you...
This may sound excessive, but in your situation I'd go for 2,000,000 in life insurance.
Basically having a young child indicates that you're likely 20's or 30's and life insurance is quite cheap at that age. Secondly interest rates are very low and assuming you want you/your spouse to have all the available options in the event of something tragic. This amount could be deposited in some no risk interest paying account at approx. 2.5% giving you about $50,000 per year in income.
This would likely be enough to allow one of you to stay at home with your kid in their younger years if you so choose, or cover child care costs and living expenses giving you flexibility.
After looking at insurance costs this makes sense to me, however you'll also need to decide what you are comfortable paying in premiums per month. Any broker will likely tell you that 1,000,000 is enough and it probably is, but do concider that while you are young extra insurance is not that much, and you will need more coverage the younger you are...
Look at 'Joint First to die' options if you go for a bigger number, this will lower your premium since your young kid won't need the value of two large policies if something happened to both of you...
Just some thoughts
That's not entirely true. A lot of joint first to die policies are maybe a tiny bit lower. We're talking like a buck a month here though, not tens of dollars. There are a number of reasons that I usually recommend people get their own policy, and cost is not a factor for the most part. In all honesty if a couple bucks a month (literally) is a huge deal there are other budgetary concerns for you to examine before or along with life insurance.
The $2M route sounds sensible, and I design plans for people where they are looking to preserve that capital and live off the interest/revenue. Most people with young kids aren't in that position though, simply because the plan is to pay the debts, and have some money leftover, but not to generate a lifetime worth of income starting the day after the policy comes into force.
Ultimately, the plan is to never use the coverage of course!
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Here's a great calculator you can use to figure out how much insurance you need. It's straight forward and tries to figure out how much monthly income you need to replace.
Life Insurance. I needs it.
