Life Insurance

[Cumberland]

WE have 250K on each of us. I was also told that government backed student loans die with you, but not private ones. And since DH went to a private school, I am thinking about increasing his.

I am pretty sure this is correct. DH has a ton of private loans and we wanted to make sure a policy for him covered these. His life and disability are through the AMA as well.

[radwife]

GreyMatterWife - Thanks so much for all the advice! We have an appointment to meet with the insurance guy tomorrow -- this is very helpful!

This is a little off topic but since Abigail brought up disability, I'll mention it.

If you sign up for long term disability coverage through an employer, check the fine print to see if any other benefits are deducted from the employer-based LTD. For example, a lot of plans will deduct income from Social Security disability and/or private coverage from the employer-based coverage. This would be a permanent disability sort of thing for it to go on long enough to qualify for SSI (I can't recall exactly how long that is). It is worth looking at because you could whittle away most of your employer-based coverage with your private plan. I would prefer private to employer for a couple of reasons, the specialty specific coverage being one of them, but it is a lot more $ per unit of insurance. Also, given the option of paying your share of a LTD premium before or after taxes, chose after.

DH's life insurance policy is over $1 million and he didn't have to do any additional testing above what he has done for less policies. He gets the super-duper healthy rate so maybe that is why. I don't think he had to provide any proof of income stuff either but that could be because he had a policies with the same company before and was replacing those with more coverage. The exams and stuff were pretty low hassle.

I think it is worth getting quotes on a couple amounts of coverage. "Rounder" numbers of coverage tend to cost less per increment -- a $1 million policy isn't necessarily double the price of a $500k policy.

[DCJenn]

We got our life insurance through USAA as well- right before my husband deployed and I just upped his before he bought the f-ing motorcycle.

Jenn

[radwife]

We had our insurance meeting with a guy from Northwestern Mutual this week. Aside from taking an hour and half (he had tons of questions for us) it was fairly painless. I was glad that we felt slightly prepared going in there becuase he was in "sell mode" and it was easier to say no. We temporarly decided on a few things while we have the month for the application to process. We have the option to change things before final signing. The whole thing was kind of morbid...wondering about how much you're worth if you were to die and worrying about locking something in at a young age in case some sort of illness were to come on. I left feeling a bit insignificant and not like a major contributor to the relationship which was kind of irritating considering I've been the sole breadwinner for the last for years and will still be the primary for the next five. I think mostly just so that I wasn't left feeling completly worthless, we're thinking about getting a 250K term life 20 policy for myself. It's small, cheap, and droppable at any time. DH kindly said that if I died all he'd really need the money for is childcare for our kids. We looked at both the 500K and 1M policy for DH. Both only required the standard blood and urine test. We were kicking around a Term 80 policy for him just so that we'd have it locked in for longer. Our hope is that by the time something drastic were to happen we would have most if not all things paid off and a proper amount of savings. At that point we could shrink or discontinue the policy.

Thanks everyone for your thoughts, advice, and insight!

[DCJenn]

Uh, remind him that 'childcare' consists of:

cooking, cleaning, laundry, baby-sitting, education, transportation, food-shopping and food preparation, entertainment, financial specialist, etc.

In fact, I think it was Newsweek a few years back ran an article on the real-life financial impact of the stay at home parent and how much it would cost if you had to hire out all of those positions.

Google it and take it with you. In a lot of ways, the SAHP is way more valuable to the family than the doc. I think it was a cash outlay of like 150k a year.

Jenn

[radwife]

ah, very useful! Thank you. Since we don't have kids yet, I don't think he fully realizes the commitment. Also, right now we do a good job of splitting up the household chores, but I'm fairly certain he didn't consider what it would be like to do all those alone on top of everything else! Heck yeah, I'm worth something!

[MrsK]

Yikes! We just had the very sobering life insurance talk with our insurance agent. He suggested tons of insurance for each of us that contemplated paying the mortgage and all other debts in full, replacing 10 years of income at the guesstimated rates for a law partner and attending physician, and sending 2.5 kids through college and grad school. I don't think so.

Abigail, thank you for the great analysis. I'm sharing it with DrK.

Bokelly - the issue regarding the private/government loans depends on the lending institution. He can attend a private university and still have government loans. (Or vice versa.) I attended a private law school but my loans were all government loans.

[Vishenka69]

He suggested tons of insurance for each of us that contemplated paying the mortgage and all other debts in full, replacing 10 years of income at the guesstimated rates for a law partner and attending physician, and sending 2.5 kids through college and grad school.

That's an overkill. He's clearly trying to talk you into way more than what you need.

[Ravenclaw]

That's an overkill. He's clearly trying to talk you into way more than what you need.

Totally agree. We were told we could add on coverage as our situation changes, i.e. more kids, house, etc.