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Thread: Life Insurance: How much?

  1. #1

    Life Insurance: How much?

    Serious question here for you guys in the know. How much life insurance do you think I need?

    Right now the wife and I have a total payout of 640,000 a piece with 10,000 on Alyson, but that seems kind of high to me. I think my wife was talked into the policy by a good salesman who worked the "you're parents now" angle. I think we pay something like 50 bucks a month for this, and is directly taken outof Patty's check. Anyway, without getting in to too much infor, here is a bit of background.

    • We are both in our early thirties and in very good health (no vices, eat healthy, exercise, etc
    • We don't have a mortgage, but do own some land (400 acres) which is a serious concern as its family land and we don't want to lose it...even if I am not around. Alyson has 4 deeded acres as of right now however...just in case something happens
    • Alyson's college is taken care of (trust fund)
    • Our retirement We have trust funds, and currently my salary goes into retirement,as well as some of Patty's, but most of hers goes to living expenses. We should be okay...but who knows
    • If Patty and I should go together (car accident for instance) my dad would get get the money and the land
    • Alyson would go to my best friend and his wife (no kids)


    I really can't tell if we have too much or not. We really don't have a lot of debt, but we do have the land to contend with. Since other people rely on it (farming) we really owe it to everyone concerned to keep things in place. At the same time, we have Alyson, and at 19 months, she will need care for a long time.

    I was just curious because the other day Patty and I went for a ride by ourselves on snowy roads. We got to thinking aloud what would happen if we both died in a car accident. We never really got a clear answer. That was kind of scary to be honest with you.
    I have no intention of traveling from birth to the grave in a manicured and well preserved body; but rather I will skid in sideways, totally beat up, completely worn out, utterly exhausted and jump off my tractor and loudly yell, "Wow, this is what it took to feed a nation!"

  2. #2
    Join Date
    Nov 2006
    Location
    Monroe, MI
    Posts
    470
    Our agent used a formula that used the idea of income replacement to determine an amount. Go out and shop around with some reputable agents and see what the concensus is. For the price, it sounds like it is term life insuarnce. We have a mix of term and whole which costs more, but theoretically the whole life builds value. If it is through her employer, it probably ends immediately if she leaves the job which is something to be aware of. We had pretty good life insurance through my previous employer, but then things started getting bad there and I left, losing all that insurance. Keep in mind that leaving could be involuntary--budget cuts, illness, etc.

  3. #3
    Join Date
    Dec 2006
    Location
    Melbourne, FL
    Posts
    472
    Travis - If any insurance company reads a few of your outdoor adventure stories you will not need to worry about buying insurance - they would never sell to you.

    Lets review some recent titles.

    1. How to use a tree to tap into the electric grid in 1 easy lesson.

    2. How to turn a snowmobile into a guided missle. Some of my friends at NASA down here think you may be onto something or maybe they said on something.

    3. Testing blue jeans for chain saw resistance for fun and profit.

    Life Insurance??? You better check out Health Insurance!

  4. #4
    Join Date
    Oct 2006
    Location
    The Heart of Dixie
    Posts
    4,268
    Life insurance can be one of the biggest rip-offs there is! It is also one of the most profitable for the Insurance companies too. Not that I am opposed to it, it's a great thing most people know nothing about it and buy on emotions and not facts. First, if you get a chance, take Dave Ramsey's Financial Peace University. This is an excellent Financial class. Not a get rich scheme but sound advice. He covers insurance among a ton of other things. It will open you eyes!!

    The reason you need the insurance is to replace any income loss in case of death to keep your spouse from going under. That might include paying off the house and enough to cover Funeral costs. Everything depends on your finances. So you need to look at how much you make. How much it would take to keep you or your spouse above water for at least a year or maybe two.

    In your case with no mortgage you don't need much. As for your daughter, that is an emotional issue, but she generates no income. So the most you need it enough to cover burial costs and maybe some for time off work to get over the loss.

    I don't remember the details but Term Life is much cheaper and by far the better deal. When you get old you typically don't have big expenses to have to cover and don't need a lot of insurance. Often times they tell you about the cash out if don't use the insurance by a certain point. Well if you run the numbers and again I don't remember all the details. But you are much better off buying Term Life and investing the difference in a good mutual fund. At the same period of time you will have several times more money (based on the average performance) than what the Life Insurance policy pays out. So in effect you gave your money to the Insurance company all those years and they are keeping most of it.

    In the class we took Dave laid it all out and it absolutely amazing to see it black and white. I can't recommend that class or at least his book enough!
    Last edited by Jeff Horton; 02-29-2008 at 03:58 PM.
    God grant me the senility to forget the people I never liked anyway,
    the good fortune to run into the ones I do,
    and the eyesight to tell the difference.


    Kudzu Craft Lightweight Skin on frame Kayaks.
    Custom built boats and Kits

  5. #5
    Join Date
    Nov 2007
    Location
    Salt Spring Island, BC Canada
    Posts
    2,070
    Gee Travis after your sled ride and hitting the rock your just thinking about this now? Hmmm I would think you should get as much as they will allow you
    Daily Thought: SOME PEOPLE ARE LIKE SLINKIES..... NOT REALLY GOOD FOR ANYTHING BUT THEY BRING A SMILE TO YOUR FACE WHEN PUSHED DOWN THE STAIRS...............

  6. #6
    Join Date
    Nov 2006
    Location
    Alpharetta GA ( Metro Atlanta)
    Posts
    499
    Just an observation. It seems that have done some very good planning. I would assume that you have gotten good advice from a professional. I would take this question back to them.

    Term insurance is a commodity. You definitely should shop around. Sometimes company sponsored are good buys, but most of the time shopping around is a good thing.

    At your age and your financial position, I would be carrying 1,000,000 on myself and 500,000 on my childs mother. This is cheap insurance to provide you peace of mind regarding your family land holdings.

  7. #7
    Quote Originally Posted by Pete Simmons View Post
    Travis - If any insurance company reads a few of your outdoor adventure stories you will not need to worry about buying insurance - they would never sell to you.

    Lets review some recent titles.

    1. How to use a tree to tap into the electric grid in 1 easy lesson.

    2. How to turn a snowmobile into a guided missle. Some of my friends at NASA down here think you may be onto something or maybe they said on something.

    3. Testing blue jeans for chain saw resistance for fun and profit.

    Life Insurance??? You better check out Health Insurance!
    Oh stop it...I am 33 years old, I live an active life

    Actually there is more to it then that, and I am being serious here. I can take a good ribbing now and then, but I am not sure some of you really know what life is like out here. Its not Surburbia where you live on 2.0 acres and mow the lawn twice a week and shovel the front walk and pretty much have nothing else to do. Not that there is anything wrong with that though.

    This is farm country where we grow crops, milk cows, cut wood and have fun when we can. Its not that life is hard, its just different here.

    I grew up cutting wood, driving tractors, fetching lobsters and playing on snowmobiles. There is nothing I have done this year that my family has not done at some point in their lives whether its dropping trees on powerlines, hitting rocks with sleds, or cutting their legs with chainsaws . Its not reckless, its just what happens when you get out and do stuff on such a big scale and do it so often.

    I could purchase my lumber from a lumber supply place, or work overtime and pay for propane and heat my house, and sit around and watch television on the weekends. Instead I harvest my own logs, cut firewood, and go snowmobiling. There is no shame in that, even when mishaps do occur. I mean keep in mind, its not like I'm cutting just a few trees here, 30 cord is equal to about 300 trees. That's a lot of trees to fell, limb, cut the tops off, drag out and put into a pile...all while walking on ice, snow and branches. Most people complain when their employer has ice patches on the walkway, I'm wading through waist deep snow while lugging a chainsaw!!

    Still should I ease off a bit and enjoy my property while still in one piece?

    Not a chance. I enjoy my property every single day. This is what my family has done for 387 years. Its what we do and what we are, even if it sounds crazy to some others who live more tranquil lives.

    Hey Pete, I did not mean to single you out here, I know you were messing with me and I can handle that. Its just that I live the good life and know it.
    I have no intention of traveling from birth to the grave in a manicured and well preserved body; but rather I will skid in sideways, totally beat up, completely worn out, utterly exhausted and jump off my tractor and loudly yell, "Wow, this is what it took to feed a nation!"

  8. #8
    Join Date
    Nov 2006
    Location
    Mountain Home, Arkansas
    Posts
    11,825
    You don't call running into rock piles at high speed with a snowmobile a vice?
    Seriously, with a family and assets, you need insurance. Term is cheapest in respect to amount of coverage vs. cost. Whole life builds up funds for the future. Depending on the state of the economy, whole life can be a hedge against losses in the future.
    How much you need can be calculated by a trustworthy, trained and experienced life insurance agent. They can be hard to find but do exist. Ask the richest people you know who their agent is and get a referral. Do your homework.
    Most importantly, get it while you are young. At your age, you are on the edge of the chart when premiums start skyrocketing. And, get accident double-indemnity. Working equipment, like you do, does put you at risk.
    Just look at your wife and daughter. That will answer the question as to whether you need the coverage.

  9. #9
    Join Date
    Dec 2006
    Location
    Melbourne, FL
    Posts
    472
    Travis - None of it meant to be negative. I many ways I envy you.

    I lived in CT for many years. Most think the path from NY - Boston is one big city. I was in the east end of CT. Lotza land and more cows than people in our small town. I flew a small plane (homebuilt Long-EZ) if you cut the engine at random over CT and let the aircraft crash on its own, most people would think it would hit a building. They would be wrong. Most times it would hit a tree or a rock. Difference in Maine is that yes you would hit a tree or a rock but no one would know it.

    I have been in Florida for some years now and would like to visit you but I cannot take cold weather. Cold for me now starts at anything below 70.
    I find it interesting that from my residence I can see Aligators, Eagles and Ospreys and with just a look a little bit in the other direction I can see and hear the Shuttle take off.

    Keep enjoying your land and outdoor activities and lets hope most FamilyWoodworker's never need to collect on any type of insurance.

  10. #10
    Join Date
    Oct 2006
    Location
    The Heart of Dixie
    Posts
    4,268
    The Truth About Life Insurance

    Myth: Cash value life insurance, like whole life, will help me retire wealthy.
    Truth: Cash value life insurance is one of the worst financial products available.
    God grant me the senility to forget the people I never liked anyway,
    the good fortune to run into the ones I do,
    and the eyesight to tell the difference.


    Kudzu Craft Lightweight Skin on frame Kayaks.
    Custom built boats and Kits

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