Another one - how much term life insurance?

[ko]

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.

[The White Coat Investor]

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.

[ko]

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?

[Bott1637]

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.

[jfoxcpacfp]

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.

[ko]

Thanks for the thoughts, very helpful.

[mitochondria]

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.