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Help with Term Life

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  • Avatar shady 
    Participant
    Status: Physician
    Posts: 41
    Joined: 04/29/2017

    I have my disability policy in place and am now looking at term life insurance. I’m 33 and in my 2nd year of practice. Married 3 weeks ago and my wife is a cRNA. Right now we are unsure if we’ll have kids, but if we do it’ll likely be 1 or 2 at the most. No major health problems for either of us. I have high blood pressure that is well controlled. I went on Term4Sale and looked at 20 year term insurance with a 2 million benefit. Prices ranged from 710-771 per year. Principal national life was the 4th cheapest at 771/year. Are these reasonable price ranges? Anything else to consider? The 710 quote was Independent order of Foresters which didn’t sound like the best choice. Principal I have heard of so was looking at that company. Appreciate any advice.

    Questions

    1. Is it advised to insure your spouse if you aren’t dependent on their income and we are debt free?

    2. Is 2 million a reasonable amount?

    3. 20 year term seems reasonable. Puts me at 53. Should be financially independent by then given high savings rate. Maybe 25 years just to be safe?

     

    #124770 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 3041
    Joined: 01/03/2017

    1.) If you aren’t depending on their income then insurance isn’t necessary.

    2.) Depending on your lifestyle and assuming your wife would keep working…it’s probably a reasonable amount.

    3.) If you’re financially independent then you won’t need term life insurance. Another option you could do is get the 25 year term and you could always cancel it early if needed. You’ll pay a little more with the premiums but maybe that will make you feel more comfortable.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #124776 Reply
    Avatar JBME 
    Participant
    Status: Spouse
    Posts: 568
    Joined: 03/26/2018

    When you have kids do you expect to depend on their income? daycare costs can be a lot and not sure what your feeling on private school is. Term insurance is so cheap I don’t think it hurts to get it, and bear in mind since women are less likely to die compared to men, all other things being equal, her premium amounts will be lower than yours because of her sex (and they’ll be lower still b/c you’ll insure her for less).

    $2m seems totally reasonable to me. The premiums cited are totally reasonable to me. I would also consider getting a 25-year term (or even 30) and as Cord said, when you are FI just stop paying the term premium and the policy will lapse and that’s it.

    #124831 Reply
    Scott at MD Financial Services Scott at MD Financial Services 
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    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 451
    Joined: 01/14/2016
    Splash Refinancing Bonus

    $2 million is reasonable and affordable.  Principal is a good company and easy for reps to work with but there maybe a way to lower your cost a bit more, talk to your rep and ask them for suggestions.

    S. Scott Nelson-Archer, CLU, ChFC with M. D. Financial Services, Inc.
    Direct Phone 713-966-3932, Email [email protected]

    #124837 Reply
    Avatar Dusn 
    Participant
    Status: Physician
    Posts: 199
    Joined: 01/02/2018

    I would get the insurance while you’re healthy.  You never know when a medical problem may come up that increases the rates or makes it impossible to get insurance at all (and even well controlled medical problems can sometimes be major issues for these companies).

    I am not much older than you, have Principal with the “Super preferred non-tobacco” risk class and would be paying $1000 (if I adjusted by term insurance policy with them for a $2mil amount).  So the 771/year you got seems pretty good.

    #124839 Reply
    Avatar LIFO 
    Participant
    Status: Physician
    Posts: 143
    Joined: 01/27/2018

    Compare the costs of laddering two policies.  You can buy a 30 year $1 million policy and then another 10-15 yr $1 million policy.  That way as your net worth increase, you can dial back on your life insurance as needed.  You can also spread risk around and buy from two separate insurers.

    #124873 Reply
    Avatar AlexxT 
    Participant
    Status: Physician
    Posts: 897
    Joined: 01/13/2016

    I suggest $3 million for you.  Definitely get at least a $2 million policy on your spouse.  If she dies, you would likely need to cut back on work, or even stay home for a while.  You would also need to hire a nanny.  Even with kids in school, you would need some help to watch them when you are on call or working late.    Term is cheap.  Get the coverage now for both of you.  No reason to wait.  If you decide not to have kids you can always drop the term insurance then.

    If you are going to have kids, you should start working on that now.  Fertility drops precipitously in women at around age 35.  That doesn’t give you much time, especially if there are unanticipated problems.

    #124917 Reply
    Avatar shady 
    Participant
    Status: Physician
    Posts: 41
    Joined: 04/29/2017

    Thanks for all of the help. Points well taken on getting life insurance for my wife. I didn’t consider all the other factors mentioned. I only took into account her income and didn’t think we needed life insurance to replace that.

    I did look at a ladder of 20 year and 10 year but it didn’t save much. Will check out 30 and 10-15.

    #124939 Reply
    Avatar AlexxT 
    Participant
    Status: Physician
    Posts: 897
    Joined: 01/13/2016

    A 30 year policy will be significantly more money per year but still cheap.  You could do 2 million 20 and 1 million 30.  The advantage of that is that if after 10 or 15 years you see that you are on track with your savings, you could drop the 30.

    The argument against laddering and just getting a full 20 or 30 year policy is that inflation will be eating away at the value of the policy, so in 20 years your policy will be worth half of what it is today, maybe less.   So keep that in mind.  There’s no obvious correct choice.  Do what makes you feel more comfortable.

    #124945 Reply

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