How much life insurance do you carry?

[laurence]

So after some analysis and input from the board (thanks Brewer), I am in the process of adding another 200k of life insurance(term, always term!), which will move me from about 8.5x to 11x. I made this move more so DW could

A)pay off the house (our only debt)

B)have enough left over that, while it wouldn't be lavish, could continue to stay at home with our daughter. DW has her own (very small) at home business, that income plus the SWR of the life insurance total would give her 60k/year. It's a strange feeling having two people so dependent on you...

...so how much are you carrying for your families/loved ones, and have to come up with an action plan for DW/DH to follow if you face an untimely death (i.e. "this is what to do with the money").

 

[Sarah in SC]

No dependents, so we just have 2x what the balance is on the house (only debt). The rest of our estate planning is pretty conventional, with a trust for niece/nephews, POAs, etc. Don't want to make it too attractive for DH to "off me" or vice/versa! I am still amazed by the folks I know who don't even have a will (and have children), let alone insurance!
Sarah

 

[brewer12345]

Laurence, I ignore income multiles, preferring to figure out how much it would take to pay off the debt and ensure a modest living for my survivors. I think that's a better way to estimate it.

 

[laurence]

I only chose that ruler because $500k to someone making 25k in kansas is different than someone making $100k in Manhattan, trying to keep it apples to apples. Wasn't implying and endorsement of that 10x earnings rule.

 

[Leonidas]

...so how much are you carrying for your families/loved ones, and have to come up with an action plan for DW/DH to follow if you face an untimely death (i.e. "this is what to do with the money").

About 540,000,of which 240,000 I'm dropping as soon as I stop burning leave and am no longer employed.

I've got an investment plan for the Princess to follow (I hope) when I croak, but no specifics of "take the insurance money and put it in X". The plan does explain where all the insurance and other death benefits are, policy numbers, who to talk to (and who to send the attorney to deal with), etc.

Even if I only keep the 300K that will pay off the house and leave 200+K left over. Princess gets 100% survivor benefit from pension and all the rest goes to her in the will.

All that may change as I'm going back through the whole plan this month and have an appointment with the estate lawyer to let her look at it to find problems and suggest improvements.

 

[CCdaCE]

About 2X. I should probably get more... and I've got to hand it to the salesmen, they always want to sell me more. Since I got burned by Whole Life once, I am aprehensive about life insur.

I have enough to nearly pay off the house.

I like to watch the salesmen play the whole life card, then the term life card... my heirs would thank me if I got more though.

-CC

 

[laurence]

just hit one of the many web sites and get yourself a term policy. Plenty of reputable places will give you a reasonable price. I can get 200k for under 10 a month.

 

[saluki9]

I keep enough that my wife could continue our standard of living from this point on.

I'm not worried about her having too much (as some here are)

 

[Sheryl]

None. No dependents, no other reason for it that I can see.

 

[frayne]

Zip, nada, none, no debt, kids gone and $1,000,000 plus portfolio. Do I need life insurance ? If so, why ?

 

[Rich_by_the_Bay]

None for us. Had some when the kids were little. Now we are close to FIRE, kids are gone and have kids of their own and a handsome income. Should be some inheritance eventually. Better to invest the amount for premiums in the market.

BTW, don't forget disability insurance when the kids are little. Much more likely to be used than life insurance when you are in your 30s to 50s, as I understand it.

 

[brewer12345]

Zip, nada, none, no debt, kids gone and $1,000,000 plus portfolio.  Do I need life insurance ?  If so, why ?

None that I can see, unless you have really high class estate issues (rare/unlikely).

 

[Outtahere]

None here except for what the company has on me, one year salary up to $50,000, dh can use that to bury me if needed. No mortage or other debt so we're fine.

 

[laurence]

We still owe $300k+ on the house, and have a 1 year old with special needs, guess that's why I'm the only one in the 9-11x category.

Good point about the disability insurance, my work offered two plans, I got the more robust one, not much more expensive.

 

[Canadian FIRE]

I got 2X salary from work. Then I carry some more for the house and an extra 50K. Overall I'm about 4X salary. That should provide enought to pay for the house and provide enough investment income so my DW can keep doing the daycare in the home and pay all the bills.

 

[donheff]

My wife and I carried $1.5M each for a while, cut it in half a few years back and dropped it entirely when I retired. The basic concept was, is either of us should die the other should be able to quit work as compensation for loss of consort

 

[LOL!]

Ours is whatever we get from our employers.  We have never bought life insurance.  We have two kids ages 10 and 14.  Before we had kids, we both had jobs that would carry us along financially.  When the kids came along, we still had jobs that would carry the survivor along without a change in financial status as well as a large enough portfolio so that if the both of us died, the kids would do just fine.

My spouse's father died while she was young, so she was sensitive to the benefits of life insurance, but also to social security survivor's benefits which can be significant.  Since she determined we did not need any life insurance, I went along with her decision.

Life insurance is not meant to be like winning the lottery for the heirs.

 

[justin]

My spouse's father died while she was young, so she was sensitive to the benefits of life insurance, but also to social security survivor's benefits which can be significant. Since she determined we did not need any life insurance, I went along with her decision.

Life insurance is not meant to be like winning the lottery for the heirs.

SS survivor's benefits are the main part of my "family continuity plan" in the event of a "disruption". These SS survivor benefits will be $30,000+ per year for the surviving spouse and two kids (at least for the next 17-18 years). That plus a couple times salary life insurance, forgiveness of massive student loans, and a decent sized portfolio should carry the survivor(s) through.

It won't be like the survivor(s) won the lottery, but they will be well taken care of.

 

[Papi]

I have about 2x my salary (about 260k) LI coverage paid for by my employer.  I do not have any additional insurance due to the mortgage being low (about 150K now, 4.875%) and being about 5 years out from FIRE.   DW has teaching credential and Masters in special ed., so that, coupled with the kids all being in school now, she could easily get a job if I happened to stop breathing     And any remaining mortgage could easily be paid off if needed.  We didn't see any reason to spend any additional money for extra coverage.

 

[yelnad]

We don't have kids. I have about 3x my salary (through work, ~ $100k) and DH has $120k. If he croaked, I would put it toward the house, which would allow me to stay in it. I couldn't afford to live here on my own at our current spending.

 

[bpp]

I said 3x-5x, but I forgot the life insurance that is automatically attached to the mortgage, which would make it 6x-8x.

Bpp

 

[laurence]

Hmm, it's interesting to see all the low votes, are there a lot of retired/FI types voting? Obviously, once I have a significant net worth, we won't have the need to continue the large coverage. I would think those who are just starting out (young dreamers) would want to cover themselves, especially if they have kids. I'm all over LBYM, but for my age (31) ten year term policies are really, really cheap. By 41 (hopefully) I won't need any more than what gives me automatically (3x).

 

[wabmester]

I self-insure, but I don't remember term life being very expensive.

You know that you'd need a nest egg = 25x expenses to ER, so why wouldn't you use that same formula for life insurance?

insurance = 25 x expenses - current nest egg.

 

[saluki9]

Hmm, it's interesting to see all the low votes, are there a lot of retired/FI types voting? Obviously, once I have a significant net worth, we won't have the need to continue the large coverage. I would think those who are just starting out (young dreamers) would want to cover themselves, especially if they have kids. I'm all over LBYM, but for my age (31) ten year term policies are really, really cheap. By 41 (hopefully) I won't need any more than what gives me automatically (3x).

Laurence, I'm only 29 so I carry a $2M term policy. I was amazed at how cheap 30 year term was when I took my policy out.

If I go, I want my wife to have as much money as possible, I don't care if she feels like she hit the lottery (she wouldn't anyway) If worked with plenty of widows, going back to work when their husbands die is the last thing on their mind. I certainly wouldn't want my wife forced into that.

 

[brewer12345]

Laurence, I'm only 29 so I carry a $2M term policy.  I was amazed at how cheap 30 year term was when I took my policy out. 

If I go, I want my wife to have as much money as possible, I don't care if she feels like she hit the lottery (she wouldn't anyway)  If worked with plenty of widows, going back to work when  their husbands die is the last thing on their mind. I certainly wouldn't want my wife forced into that.

I don't carry as much coverage as saluki, but taht's about how I feel about it. Add in kids and I care even less about the whole "lottery" issue.