Life Insurance for Non-Working Spouse

[bathuro]

Hello Group -

Happy to have started listening to the podcast, and now reading the forums/blogs.

My so-called financial advisor, who used to work for NWM (back when he sold me both term and whole LI, which I will probably lay out in another post as I have since learned the poor value of WLI) and now works for MM, is trying to sell me more life insurance for my spouse who is a SAHM. I currently have $50K term coverage for her through my employer with kids who are essentially 12 and 8 years old.

Do I need to go up to the $150K-$200K he is suggesting? It's not terribly expensive, but if I can put that $400-$500 per year somewhere else, I would rather do so.

Thanks for your thoughts.

BATman

[Scott at MD Financial Services]

My opinion is $50k is pretty low. If you stick with Term and she is in good health you can probably get $500k for less than $20 per month.

[afan]

Whether you need more for your spouse depends on your overall financial picture. If you could afford to hire people to take over many of the things your spouse does for the family, then you might not need more insurance.

If paying for all that would be difficult or impossible with your current income and assets, then you need more insurance. How much you need in total depends on your circumstances.

No reason to buy your term from the person who sold you whole life. NWML and Mass Mutual are good companies and you should get prices from them. Also look at NY Life and USAA. And speak with an independent agent to get prices from companies that do not sell through captive agents.

Of course, the price will depend on the amount of insurance you buy, so figure that out, then shop for coverage.

Agree that $50,000 does not go far.

[Peds]

sorry are you asking about buying more whole life?.......

[JBME]

you're working to break your relationship with this advisor right?

[Shant]

Depends on how much support you have available locally for free and whether you are already paying for things like a cleaning service. Also look at the effect it would have on your tax situation if you are currently income splitting in any way.

[Anne]

Also depends on how financially independent you are. Could you afford to take several months off and be with your kids/grieve/help them grieve if your spouse passed? I know some people deal with grief by diving into work...but regardless of how you would handle it your kids would likely need you more and the last thing you would need in that situation is financial pressure. I would not use your current advisor though as it sounds like you are getting ripped off with those quotes.

[Path Guy FI]

My kids are younger than yours, but we decided on a $1 mill/20 year term policy for my spouse who is also a SAHM. Might be more $ and a longer term than some think is necessary, but I value what my wife does at home and for the kids very highly, and the premium is cheap in my view ($340/year). This expires when our youngest turns 18.

Maybe sit down and make a list of all the things your wife does as a SAHM and consider how much you'd be willing to pay to have those things taken care of if she weren't around. If you decide to/are able to cut back your working hours to do some of those tasks, factor in your reduction in pay as well.

[jfoxcpacfp]

We typically recommend $1M term as a minimum on the SAH spouse. As Anne said, the SAHP fulfills a role that is rather irreplaceable. Our goal is for the surviving spouse to be able to take off as long as the need to grieve with the children as everyone adjusts to their new routine. I would not want the SS to feel any financial pressure to have to go back to work as this might feel like a second abandonment to the children. All depends on the specific family, ages of children, financial stability otherwise, etc. Of course, the goal is to drop coverage when you become FI.

[MPMD]

We typically recommend $1M term as a minimum on the SAH spouse. As Anne said, the SAHP fulfills a role that is rather irreplaceable. Our goal is for the surviving spouse to be able to take off as long as the need to grieve with the children as everyone adjusts to their new routine. I would not want the SS to feel any financial pressure to have to go back to work as this might feel like a second abandonment to the children. All depends on the specific family, ages of children, financial stability otherwise, etc. Of course, the goal is to drop coverage when you become FI.

i cannot really imagine it ever making sense for a doc with kids at home to have less than $1M term on a SAHD/M.

Jfox goes through lots of good reasons above and obviously as others have said if you lose the SAH parent even setting aside the emotional toll there is stuff that is going to have to get done. when you actually value what the market cost is for what the average SAH mom w/ 2 kids in school does it is.......... a lot. nanny is $30-40k if you're lucky and that probably won't take care of all of the household work.

$1M term on a healthy person costs essentially nothing when looked at against the income of really any doc or high income professional.

just game it out, your SAH spouse dies and your plan is to work more to pay other people to do what they were doing and for your kids to have less time with their remaining parent? hard pass.

[jfoxcpacfp]

Hello Group -

Happy to have started listening to the podcast, and now reading the forums/blogs.

My so-called financial advisor, who used to work for NWM (back when he sold me both term and whole LI, which I will probably lay out in another post as I have since learned the poor value of WLI) and now works for MM, is trying to sell me more life insurance for my spouse who is a SAHM. I currently have $50K term coverage for her through my employer with kids who are essentially 12 and 8 years old.

Do I need to go up to the $150K-$200K he is suggesting? It's not terribly expensive, but if I can put that $400-$500 per year somewhere else, I would rather do so.

Thanks for your thoughts.

BATman

Is your goal really to work with a salesman or a true advisor? Worlds apart.Add-on - your wife is being quoted $400-$500/yr $150k-$200k insurance? Unless there is a good reason for the high rates (such as high mortality health condition), you might want to look elsewhere. I s/h posted earlier that I’m not sure why you’re sticking by this guy who already stuck it to you. But those rates should probably cap the deal.

Scott at MD Financial Services may want to step in and correct/adjust my response, always appreciate educated opinions from professionals.

[billy]

I pay around the same amount (47/month) for 2 million in term life coverage. Shop around for a better deal but yes, insure your wife for more.
I regretfully thought the same as you at one time (but didn't have kids), now my wife is uninsurable (cancer)- if we had kids I'd have no idea how to handle her death and child care. MPMD said it best - reread his last paragraph

[Scott at MD Financial Services]

Is your goal really to work with a salesman or a true advisor? Worlds apart.Add-on - your wife is being quoted $400-$500/yr $150k-$200k insurance? Unless there is a good reason for the high rates (such as high mortality health condition), you might want to look elsewhere. I s/h posted earlier that I’m not sure why you’re sticking by this guy who already stuck it to you. But those rates should probably cap the deal.

Scott at MD Financial Services may want to step in and correct/adjust my response, always appreciate educated opinions from professionals.

Depending on age and health but assuming mid to late 30's (due to a 12 year old) and good health then $1 million for 10 years rate lock could be as little as $15-18 per month. That 10 year contract gets the kids to 22 and 18. I certainly see where one can say "let the family help out, I am FI" and all kinds of other stuff to justify why not to buy some coverage but if you can change the word of "obligated" to help to "option" to help for $20 per month then I would certainly do it. Heck that is about the same cost as 2 Dominos pizza a month, that's it. Keep it in perspective and make sure you are not the "penny wise and pound foolish" individual out there.

[Tim]

You NEED a new advisor, hard stop.
You aren’t insuring income or burial costs.
You are insuring value in case of a catastrophe..
Call Scott and apply for term insurance. Simple.