I have some life insurance, but after taking stock of changed circumstances (marriage, kid, increased income, etc.) I've decided to increase the amount of life insurance I carry.
I'm only looking at term life insurance, probably something between 20 and 30 years. I'm probably somewhere between 10 and 20 years away from FIRE, depending on some lifestyle choices we make and of course, how the economy turns out in the mid-term future.
I know the old rule of thumb about carrying a life insurance between 10x - 15x gross annual income. (I'm carrying less than that now, which is why I'm looking to increase it.)
My situation is that we live off of roughly half of my income, with the rest going toward paying down debt and building up our FIRE stash. Were I to die in the near future (e.g. within the next 5 years) I think the full 10x - 15x annual income would be necessary, which is why I want to increase it (we're a single-income household, so my income is our entire household income).
But as we continue to save and pay down debt, getting closer to FIRE, I would think our life insurance needs would decrease. If I'm somewhere between 10 and 20 years away from FIRE right now, then I can imagine that in 10 years, if I'm not FIREd already, I'll be much closer to it, and so whatever life insurance assets my wife would need would only be to carry her forward to the FIRE threshold.
So I've been thinking of perhaps taking out 2 (or 3) additional life insurance policies, e.g. each covering maybe 3x annual gross income, rather than one additional policy for another 9x annual income. I figure that if, at some point in the future, we decide we can dial down our life insurance needs, I can simply cancel one of the policies. It would also be a way to diversify my life insurance "investment", of course I'd stick with solid companies that I expect to be around come hell or high water, but still, these days, spreading my life insurance eggs around several baskets seems on the surface to be a good idea.
Has anyone ever done something like this, implementing an overall life insurance coverage plan using multiple life insurance policies? Any reasons why it would be a bad idea, e.g. higher costs overall due to fewer discounts maybe?
Just kicking around the idea and thought I'd see what you guys have done. How'd you determine your coverage amount, and did you consolidate into a single policy or spread it over a few of them?
I'm only looking at term life insurance, probably something between 20 and 30 years. I'm probably somewhere between 10 and 20 years away from FIRE, depending on some lifestyle choices we make and of course, how the economy turns out in the mid-term future.
I know the old rule of thumb about carrying a life insurance between 10x - 15x gross annual income. (I'm carrying less than that now, which is why I'm looking to increase it.)
My situation is that we live off of roughly half of my income, with the rest going toward paying down debt and building up our FIRE stash. Were I to die in the near future (e.g. within the next 5 years) I think the full 10x - 15x annual income would be necessary, which is why I want to increase it (we're a single-income household, so my income is our entire household income).
But as we continue to save and pay down debt, getting closer to FIRE, I would think our life insurance needs would decrease. If I'm somewhere between 10 and 20 years away from FIRE right now, then I can imagine that in 10 years, if I'm not FIREd already, I'll be much closer to it, and so whatever life insurance assets my wife would need would only be to carry her forward to the FIRE threshold.
So I've been thinking of perhaps taking out 2 (or 3) additional life insurance policies, e.g. each covering maybe 3x annual gross income, rather than one additional policy for another 9x annual income. I figure that if, at some point in the future, we decide we can dial down our life insurance needs, I can simply cancel one of the policies. It would also be a way to diversify my life insurance "investment", of course I'd stick with solid companies that I expect to be around come hell or high water, but still, these days, spreading my life insurance eggs around several baskets seems on the surface to be a good idea.
Has anyone ever done something like this, implementing an overall life insurance coverage plan using multiple life insurance policies? Any reasons why it would be a bad idea, e.g. higher costs overall due to fewer discounts maybe?
Just kicking around the idea and thought I'd see what you guys have done. How'd you determine your coverage amount, and did you consolidate into a single policy or spread it over a few of them?