Seems like kind of a harsh question to ask, but I think it’s a necessary one. A number of years ago my wife and I purchased a $100,000 term life insurance policy on me. My rationale was that we were young and didn’t have much debt and that was enough to get my wife back on her feet after dealing with my death. Fast forward a few years and suddenly we had a child and a mortgage. We increased our life insurance policy to $250,000 and I also get roughly $150,000 through my employer. The insurance is cheap and is a level term policy for 20 years. My thinking is that by the end of the 20 years, we’ll basically be self insured and won’t need an expensive life insurance policy. I sure hope I’m right because life insurance for me when I’m 55 is going to be astronomically expensive.
How did we settle on the $250,000? Well, frankly it wasn’t very scientific. We knew we needed more than $100,000 and we thought $500,000 was excessive. After all, I didn’t want to give my wife any reasons to want me dead. I kid. Anyway, it turns out that the life insurance we have now will more than cover our mortgage and will give my wife and daughter the option of living in this house long term, regardless of how much she makes at her job. When you add in the social security benefits that they would receive until my daughter is 18, they should be more than comfortable.
Having this all lined up brings me some inner peace. I want to know that they’ll be okay if anything happens to me. My only hope is that we never have to use it.
Having the same thoughts myself as my husband and I have two kids and recently paid off one of our houses (we still have a small mortgage on the other one) Any experience with will? Trying to figure out the best route both in terms of planning and cost. Some software program or seeing an attorney?
We used Quicken Willmaker when my mom needed to make a will. We haven’t actually had to use the will yet though so I don’t know how successful it’s going to be. Honestly, I think it’s going to be more than adequate. It clearly documents what my mother’s wishes are and all the other stuff that a will covers. We have an older copy of a will we made with the same type of program. It documents who we want to care for our daughter in the event that we both die and also clearly documents what should be done with our estate.
Great logic. There is so much mis-information out there about insurance. Just buy what you need, on term, and be done with it. Just like your car, you’re not going to buy a policy with a cash value.
Keep bringing the truth.