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Another one - how much term life insurance?

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  • Another one - how much term life insurance?

    Inspired by another recent thread, I've been doing some thinking about my level of term life insurance and would welcome any input on how much term life insurance I should be carrying. Here are my details:

    - 33 years old, married with two young kids
    - wife stays at home and doesn't earn a salary
    - current income is $205k base, ~$60k annual bonus (not guaranteed but usually quite likely), ~$60k in annual equity grants
    - $370k left on mortgage with no other debt
    - $100k in tax-advantaged retirement savings
    - Current annual spending (excluding retirement savings) is ~$95k (mortgage comprises ~$35k of that)


    I've currently got $2M in 30-year term but have started wondering if I need more. In the event of my demise, my wife could go back to work and earn a moderate salary (think <$80k), but we'd definitely like for her to be able to stay home with the kids while they're little at least.

    Do you think I'm under-insured? Thanks for any thoughts.

  • #2
    I think you could use another million, but you're at least in the ballpark. I mean, you're not like most sitting there with $200K.

    Might want to get a half million on her too.
    Helping those who wear the white coat get a fair shake on Wall Street since 2011


    • #3
      Helpful, thanks.


      Oh, and I should have mentioned that I do have a $500k 20-year term policy on my wife. Sorry I missed that.


      If I do another $1M (or maybe even $2M) for me, I was thinking of doing a 20-year term. No need to do another 30-year term since my first $2M is 30-year, right?


      • #4
        I wouldn't do another 30 year policy as your net worth will be increasing and thus you'll be able to self insure. So another 1 million at 20 or 15 or even 10 depending on how fast you think your nest egg will grow. I went with 1 mill 30 year 1 mill 20 year and 1.5 10 year for my ladder.


        • #5
          Agree on another $1M for shorter term. 2 small kids and SAHM - would be nice if she could SAH as long as possible. I also think $.5M on her is a bit low, would up it to $1M. You might want to take a year or 2 off to be with the kids, or at least cut back, if she were to die. They would have enough grief losing their mom w/o your doctor's schedule.
          Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


          • #6
            Thanks for the thoughts, very helpful.


            • #7
              It's great that you have taken the initiative to secure term life insurance so early in your career. I believe that you have a reasonable chance to hit the one million mark in retirement funds within 10 years with a consistent savings plan. In a sense, you will be self-insuring another million to add to your 2 million dollar policy with this strategy.