Current spending excluding the mortgage and child expenses is $75k. 10x my income would be $2.0M which seems high today, though might not seem that way in 20 years.
My employer provides an accidental death policy which pays out a couple times my salary, but as I understand it that is only for sudden and accidental death, so would not cover things like cancer for example.
I like the idea of an ART policy, was not aware of that option.
Now, if you die, you won't be here, so your food, clothing, medical care, and entertainment expenses go away. But, your wife will have food, clothing, medical care, toys, etc for a child. And, you won't be around to do handy chores, including some child care. So $75k might still be as good as any guess.
Your wife could quit work and become a full time mother. She and the child would get SS benefits up to 1.5x your PIA (check your SS statement). I'll guess $25k.
So she'd want $50k for, let's guess, 16 years. That's $800k.
She'd also want to pay off the mortgage for another $250k.
That leaves the whole $1.1 million to fund college, help transition her back into the workforce, and provide a big chunk of retirement savings for her. Maybe you'll say that's excessive, and decide to carve out $XXX,000, and cut the life insurance by that amount.
As I said above, she may decide to continue working. But, she'll lose some of the SS, she'll pay more taxes, have work-related expenses, and need to find quality child care. IMO, those things could chew up her entire earnings as long as the child is small. So, I don't do a lot of offset for her earnings. YMMV.
Presumably, the same math works for her life insurance.
We're way below $2.0 million. The original gut feel of $1.0 million seems in the ballpark.
Theoretically, you'll need less insurance as your assets grow. But, if your income and lifestyle also expand, you may find that you have more to replace. Some people do layers, half in a 10-year policy, half in a 20-year.
