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Life Insurance policy question
Posted on 3/2/12 at 4:05 pm
Posted on 3/2/12 at 4:05 pm
I'm soon to be 26 with a 2 year old daughter and I'm single. Going to purchase a term life insurance policy. I make about 50K a year. How much should I get? $150k? $250k? Thanks in advance
7
Posted on 3/2/12 at 4:10 pm to bthomp1
quote:
I'm soon to be 26 with a 2 year old daughter and I'm single. Going to purchase a term life insurance policy. I make about 50K a year. How much should I get? $150k? $250k?
10 x your annual income.
If you're married, this is what you will want to purchase so that your wife and children will not have to worry (as much) for a few years, while adjustments are being made.
In other words, they will not sustain any loss of income.
This post was edited on 3/2/12 at 4:14 pm
Posted on 3/2/12 at 4:26 pm to Will Cover
Will cover,
Is 10x the max? I thought there had to be a certain income and net worth estimate.
Ie. Single, make 100k per year, but I couldn't just take out a 3 mil policy.
Or as long as you can afford the premium you can purchase?
Is 10x the max? I thought there had to be a certain income and net worth estimate.
Ie. Single, make 100k per year, but I couldn't just take out a 3 mil policy.
Or as long as you can afford the premium you can purchase?
Posted on 3/2/12 at 4:28 pm to THEphenom
quote:
As a general rule of thumb, you should have 8–10 times your income in guaranteed renewable term life insurance. Life insurance is designed to replace you, financially speaking, if something happens to you. Let's say that you earn $50,000/year, and you have $500,000 in term life. If you pass away, your spouse should take the money and invest it in a solid mutual fund. If your spouse simply pulled 10% interest out each year, he or she would receive $50,000, without ever touching the principle. Your income would be replaced.
Per Dave Ramsey
Posted on 3/2/12 at 4:39 pm to Will Cover
Nice reference.
Thanks.
Thanks.
Posted on 3/2/12 at 5:25 pm to THEphenom
quote:
Or as long as you can afford the premium you can purchase?
My wife never worked while our kids were growing up so no actual income, but had a $500k term policy on her, there was no problem getting it. We wanted the money to provide a housekeeper/nanny for the kids if she were to die.
Posted on 3/2/12 at 5:29 pm to bthomp1
We changed our policy after our 3rd child was born. I was working only very part time -- made about $15K per year. My elected coverage was $500K ... figured that should anything happen to me my husband would need to have the money to help cover all of the things that I did. Hire a maid ... after care for the kids ... would probably eat out a billion times more than we normally do ... college would be covered for the 3.
His is the same amount with an additional million that covers his yearly farm loan in the event something happens to him and the crop can't be harvested.
Our $500K policy is through Protective Life -- think mine is like $450 per year (age 42, nonsmoking female, don't remember his premium) and the other is through Woodmen of the World (price was competitive with the other and they were able to get it done quicker -- just don't know the price.
His is the same amount with an additional million that covers his yearly farm loan in the event something happens to him and the crop can't be harvested.
Our $500K policy is through Protective Life -- think mine is like $450 per year (age 42, nonsmoking female, don't remember his premium) and the other is through Woodmen of the World (price was competitive with the other and they were able to get it done quicker -- just don't know the price.
Posted on 3/2/12 at 5:42 pm to bthomp1
OP, buy a minimum of 500k. The quote from Ramsey is pretty sound, but you can't get that kind of interest these days. Better to be safe than sorry.
Buy from a reputable company with good ratings
Buy from a reputable company with good ratings
Posted on 3/2/12 at 9:02 pm to wasteland
$1M 20-30 year term is cheap for a healthy 26 year old. I would get at least that.
Posted on 3/2/12 at 10:10 pm to Janky
Go sit down with an experienced guy from northwestern mutual, NY life or MetLife.
Unfortunately as much as Dave Ramsey likes to think. He has no idea what your whole situation and future goals are.
You definitely want more than 150k with a wife and a 2 year old.
150k would barely cover private school in Baton rouge for 12 years
Unfortunately as much as Dave Ramsey likes to think. He has no idea what your whole situation and future goals are.
You definitely want more than 150k with a wife and a 2 year old.
150k would barely cover private school in Baton rouge for 12 years
Posted on 3/2/12 at 10:19 pm to cbtullis
quote:
If your spouse simply pulled 10% interest out each year, he or she would receive $50,000, without ever touching the principle
This is why I have a problem with Dave Ramsey when he talks about insurance.
Simply pulled 10% interest out each year out of mutual funds. I'm sure a hell of a lot of people would like to see that simply done each year.
Oh and them by the way mr Ramsey, I'm assuming you ate going to pay the taxes on those gains when she pulls the money out on her "10%", so she can still have that exact amount every year.
Dave has some very good points when it comes to paying off debt and living within your means and not using credit.
But that's about it!
Posted on 3/3/12 at 9:23 am to THEphenom
Where has anyone made close to 10 percent in the last 13 years? Really should half that to prepare for the future.
Posted on 3/3/12 at 4:24 pm to cbtullis
Taxes would be taken out of a 50k salary also, potentially less taxes on the mutual fund.
Posted on 3/3/12 at 4:34 pm to bthomp1
Single with a two year old, $250k would be more than enough. Up it to at least 500k if not 750k if you get married.
I'd go with a thirty year term policy for 250k now, and probably add another 500k policy when you get married/have another kid.
I'd go with a thirty year term policy for 250k now, and probably add another 500k policy when you get married/have another kid.
Posted on 3/4/12 at 1:51 am to bthomp1
Still have questions, but you need at least $500k and at least a 20 yr term.
Posted on 3/4/12 at 6:22 am to Signature
Just fyi my wife both got 1M policies through Hartford recently, i'm 36, she's 34, 20 year term, a little over 1500.00 a year. There were some cheaper, but we felt comfortable with Hartford for a minimal premium.
Posted on 3/4/12 at 10:07 am to bthomp1
Buy as much as you can afford while you are young and healthy. You never know what will happen health wise 5 years down the road. Also, life insurance won't get any cheaper as you get older
Posted on 3/4/12 at 11:43 am to bthomp1
Buy as much as you can afford while you are young and healthy. You never know what will happen health wise 5 years down the road. Also, life insurance won't get any cheaper as you get older
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