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Thread: Life insurance

  1. Quis custodiet ipsos custodes?
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    #1

    Life insurance

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    Talk to me about life insurance. I just bought some through my company but now I'm thinking I should have bought more. How you decide what a good amount is?

    Right now I'm thinking that my goal would be if anything happens to me, the insurance would be enough to:
    cover funeral expenses etc.
    pay off our mortgage
    pay off my student loan
    cover at least 3 months of expenses in case DH needs to take some time off work

    We don't have any kids or anything, so that's less to worry about there. The only debt we have is the student loan and the mortgage (no car payment, no CCs, etc. etc.) Am I forgetting anything that I might want to be thinking about?
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    #2
    That sounds like plenty. Without a mortgage, his living expenses will be pretty low, so the money will go very far. So 3 months of current living expenses is probably way more than 3 months of mortgage-free living expenses (and student loan payment-free). And most jobs wouldn't give 3 months off anyway, but it gives him a nice cushion.

    Do you currently work and bring in much income? If you do, you might want to increase things jut a little bit so he can adjust to the decreased income. However, again, not having a mortgage or student loan payments (and having expenses for only 1 instead of 2) will make the same lifestyle much cheaper.

    We have way too much insurance as DH is a little obsessed with it. I'd be perfectly comfortable with what you posted.
    Science always wins over bullshit. ~Dick Rutkowski
  3. I'm a boss playa', I don't bleed like you.
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    #3
    we kind of just picked a random amount. we have a lot but its not more than 20$ a month so i don't mind.


  4. Quis custodiet ipsos custodes?
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    #4
    Quote Originally Posted by villanelle View Post
    That sounds like plenty. Without a mortgage, his living expenses will be pretty low, so the money will go very far. So 3 months of current living expenses is probably way more than 3 months of mortgage-free living expenses (and student loan payment-free). And most jobs wouldn't give 3 months off anyway, but it gives him a nice cushion.

    Do you currently work and bring in much income? If you do, you might want to increase things jut a little bit so he can adjust to the decreased income. However, again, not having a mortgage or student loan payments (and having expenses for only 1 instead of 2) will make the same lifestyle much cheaper.

    We have way too much insurance as DH is a little obsessed with it. I'd be perfectly comfortable with what you posted.
    That's a good point about the living expenses. I'll have to remember to take out the house payment and student loan payment when I calculate those.

    I do work, and we make about the same amount of money, so that's something to keep in mind as well. But yeah, with all of our debt gone and having to buy for one person instead of two, that will factor in as well.

    Know exactly what you mean about "too much" insurance. Part of me just wanted to max out the policy but I stopped myself from doing that because the max amount is a little ridiculous hehe.

    You definitely gave me a new perspective to think about. I'm going to call my financial advisor next week too and go over some things and that part is going on the list.
  5. Formerly BooBoo_Bear
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    #5
    I have as much as I can through my work. But I have a lot of student loans and some other debt, I owe my dad money as well from helping me buy cars, and I have a son who I want to be set for college if he chooses to go. He also has a 10k policy for funeral costs.

    But, not having kids, I think your amount sounds reasonable . I would reevaluate though, if you do ever have kids.
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    #6
    Be sure to look into the terms of your student loan. My understanding was they aren't charged if you pass away. I didn't think that responsibility was passed to the spouse. I could be waaaay off base, but I would look into that.

    I would consider the cost of things you do around the house. Landscaping? Housekeeping? Etc.
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    #7
    Just be careful and hold on to a healthy does of skepticism when talking to your financial advisor. Unless he's someone you pay for his time and who has no affiliation with the insurance companies, then it is in his best interest to sell you as much insurance as possible.

    Since you make half the income, I'd probably make sure there was 8-10 months of your income, on top of the mortgage and student loans and the funeral costs. Yes, his costs will decrease, when you are gone but not by half, and that will give him plenty of money to take some time off he wants, and then have time to make adjustments if he needs to decrease his fixed expenses or make other life changes.

    I don't have student loans, so I don't know, but how do those work in the case of death? They are in your name only (I assume?) so I don't know how that works if you die and leave joint assets. That's a question for your advisor, if you have one. Generally debts can't be inherited. If someone dies and their estate won't cover their credit card balances, for example, then the creditors are paid whatever the estate has, and they rest of the debt they have to write off. (So no one is stuck paying mom's $100k credit card balance, though it might eat up any inheritance they would have otherwise gotten.) However, I don't know how that works if the debt is singular (yours only) and you die and everything is joint, so it isn't really an estate being inherited.

    I guess what I'm saying is that you should look into it to make sure your DH would even be responsible for paying off the student loan.
    Science always wins over bullshit. ~Dick Rutkowski
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    #8
    Another thing, consider medical expenses in this life insurance. My aunt's life insurance is paying her huge medical bills she acquired in her last few months and that's it So I would look into at least (AT LEAST!) a $20,000 cushion even if you have great health insurance. A friend of mine wound up in the hospital and it was at the very least $15,000 after the insurance was billed for the one night stay.
  9. MilitarySOS Jewel
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    #9
    I went with a 20-year-term that if DH were to invest it instead of spend it would return an amount that would equal my annual income. I want DH to have a bit of freedom and flexibility in choosing a new direction for his life and not have to worry about how to pay the bills. All the student loans, except one tiny one, are in my name so if I kick the bucket they are forgiven anyway so I didn't worry about that when buying.
  10. Quis custodiet ipsos custodes?
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    #10
    Oh that's a good point about student loans. I'm so used to thinking of them as non-dischargeable but yeah, it is very possible that that wouldn't have to be paid.

    I'll look into the health insurance too. These are really good questions for me to bring to my advisor! (I'll be getting a second opinion from a family friend who is qualified but doesn't have a stake in my decision too, although I trust the people I have now you're right that it's good to consider all angles).
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