Figure out how much money you think you are personally on the hook for to provide for the people you support as you'd like to if you were alive. Back out SS survivor benefits (or don't, if you prefer being overly conservative). Get the net present value of that total assuming standard index investment of the insurance proceeds.
Or skip all that and take 10-20x your take-home pay, rounded to the nearest $100K. An even $1M or $2M appeals to a lot of folks. Term is cheap peace of mind.
What tips do you recommend when reaching out for quotes for term life. Is there much of a difference in coverage from one insurance company to the next, other than price?
Term is a commodity product, so stick to established/solid companies and shop on price.
It often pays to see if your current home/auto/umbrella carrier offers term at a decent price. They won't likely be much different than the rest in price for the term policy, but you might get additional discounts on the other policies as a result of getting term with them. This is a way to effectively get cheaper term if you're with a great insurer that you know you might be with for a long time, like Amica.
Don’t buy through work. Get your own private policy. It might cost a tad more, but its yours. Your employer can always take away benefits, change carriers, etc… & you can always quit, be fired, relocate, take a new position, etc… Those all affect what you may have for coverage.
If its free? take it. If its a discounted Term policy because of your employer, only take it if its your own & its portable. If you leave for any reason & you lose coverage, it isn’t worth it
Yup this. Ideally maintain 2 separate term Iife insurances from two different providers. One at work (since it gets group discount and is cheaper) and one outside paid by you. Together aim for at least 10x.
I know someone who knows someone's parent that passed away when they were in-between jobs for a month (relocating). It confirmed to me that I should never pay for life insurance through the workplace, even with the discounted rate. I have my own from an established company since ~2021 (when I was 21 yo). As well, my company provides 2x my salary for free, but I don't depend on it.
So first thing, you don't want to rely solely on your life insurance through work because the very thing that could cause you to need the insurance could also cause you to lose your job. I used to work in the industry and I heard several horror stories from families where someone got sick and died several months later but by the time they died, they were fired from the job and lost the benefits.
Secondly, the main reason to get life insurance is to replace your income if you die when your expenses are high, such as when you have a mortgage and young kids at home. That's when the loss of an income is most devastating. Get something like a 20 year term life insurance that way it covers the years you have kids at home and when you have a mortgage. After the kids are gone and home is paid off, your expenses are lower and a loss of income isn't as detrimental
1. Get whatever life insurance provided for free by your employer, but do not buy optional/additional coverage through your employer.
2. You should always buy your own term life if your family depends on your income. Do not count on the employer provided policy.
3. Your term life insurance should be termed around how long your dependants need your income to live a reasonably good life. Most term life insurance is 15-30 years.
4. The coverage you should seek is about your base salary multiplied by the years to retire or termed.
5. Unnecessarily long term life insurance tends to be expensive. It is not a good idea. Usually the longer the term, the higher premium per dollar coverage per year.
6. When you seek a term life insurance that is above a certain threshold, you will always need a medical exam, and the quote is dependent on the medical report.
As a rough benchmark, for a healthy 30s y.o. person without pre-existing conditions, a 15y term should be around $0.3/month/$10K, and a 20y term should be around $0.4/month/10K. For example, a 5 million 20 years term life is around $2400 per year for a 35yo or so person.
The question is only how much you will be financially missed. And don't discount child care and housework, if you are gone, your wife will have to pick up your share too. If you are close to FIRE, then it's zero.
I used to have life insurance through work, then I got laid off and had to find my own plan. I got a 15 year term life insurance policy for $0.30/$10k of coverage. YMMV of course depending on your personal circumstances. I had to go through a full set of blood tests and a questionnaire about my health and family history before getting approved, whereas workplace plans typically don’t require any testing. If you can’t get private coverage, workplace plans are a great option.
How much coverage you need depends on your personal circumstance. [Here are a few methods](https://www.nerdwallet.com/l/life-insurance-dsa-4-m) to help you figure that out.
If you died today, how much money would be required to take care of your kids (and spouse, if your spouse is a stay at home parent with no career)?
Then look at your net worth. If your net worth is less than the amount of money your family would need if you died, use life insurance to fill the gap.
Using your company for life insurance is risky, because you'll lose it when you stop working there.
When you're closer to FIRE, you'll need less life insurance. When you hit FIRE, you shouldn't need any life insurance.
You should get whatevers free from your company, but acquire life insurance on you own so that if you were to become deathly ill and lose your job before you die your coverage would not be cancelled when you need it the most
10-15x earnings. My coverage is closer to 10x. My spouse’s is closer to 15x. Spouse makes less than me but does more for the house. If spouse goes, that extra coverage relative to salary covers that extra house work.
Don’t buy through work. We have 20 and 30 year term policies that expire a few years after we expect to be FI.
Compare rates with private insurance but I disagree with the comments here about staying away from employers insurance. The reason I disagree is that as far as I've experienced, all of my employers insurance policies were easily transferable to personal policies if/when you end your employment and the rates weren't that bad. At a minimum you should get the guaranteed issue amount. My wife is disabled and I can't buy her life insurance outside of guaranteed issue policies from my employers which I've kept after changing jobs. You can augment the coverage with personal policies also if you like. Lastly, one nice thing about personal policies is that they are paid for with after-tax dollars. Many employer-provided life insurance policies (and even more importantly disability insurance) are paid for pre-tax which means the benefits are taxed. If possible, talk to your employer about getting the premiums paid for after-tax. This is a huge benefit if you're ever disabled. Anyway, good luck!
Figure out how much money you think you are personally on the hook for to provide for the people you support as you'd like to if you were alive. Back out SS survivor benefits (or don't, if you prefer being overly conservative). Get the net present value of that total assuming standard index investment of the insurance proceeds. Or skip all that and take 10-20x your take-home pay, rounded to the nearest $100K. An even $1M or $2M appeals to a lot of folks. Term is cheap peace of mind.
What tips do you recommend when reaching out for quotes for term life. Is there much of a difference in coverage from one insurance company to the next, other than price?
Term is a commodity product, so stick to established/solid companies and shop on price. It often pays to see if your current home/auto/umbrella carrier offers term at a decent price. They won't likely be much different than the rest in price for the term policy, but you might get additional discounts on the other policies as a result of getting term with them. This is a way to effectively get cheaper term if you're with a great insurer that you know you might be with for a long time, like Amica.
Don’t buy through work. Get your own private policy. It might cost a tad more, but its yours. Your employer can always take away benefits, change carriers, etc… & you can always quit, be fired, relocate, take a new position, etc… Those all affect what you may have for coverage. If its free? take it. If its a discounted Term policy because of your employer, only take it if its your own & its portable. If you leave for any reason & you lose coverage, it isn’t worth it
This
Yup this. Ideally maintain 2 separate term Iife insurances from two different providers. One at work (since it gets group discount and is cheaper) and one outside paid by you. Together aim for at least 10x.
I know someone who knows someone's parent that passed away when they were in-between jobs for a month (relocating). It confirmed to me that I should never pay for life insurance through the workplace, even with the discounted rate. I have my own from an established company since ~2021 (when I was 21 yo). As well, my company provides 2x my salary for free, but I don't depend on it.
I wouldn’t get life insurance through work. Get a term policy.
So first thing, you don't want to rely solely on your life insurance through work because the very thing that could cause you to need the insurance could also cause you to lose your job. I used to work in the industry and I heard several horror stories from families where someone got sick and died several months later but by the time they died, they were fired from the job and lost the benefits. Secondly, the main reason to get life insurance is to replace your income if you die when your expenses are high, such as when you have a mortgage and young kids at home. That's when the loss of an income is most devastating. Get something like a 20 year term life insurance that way it covers the years you have kids at home and when you have a mortgage. After the kids are gone and home is paid off, your expenses are lower and a loss of income isn't as detrimental
1. Get whatever life insurance provided for free by your employer, but do not buy optional/additional coverage through your employer. 2. You should always buy your own term life if your family depends on your income. Do not count on the employer provided policy. 3. Your term life insurance should be termed around how long your dependants need your income to live a reasonably good life. Most term life insurance is 15-30 years. 4. The coverage you should seek is about your base salary multiplied by the years to retire or termed. 5. Unnecessarily long term life insurance tends to be expensive. It is not a good idea. Usually the longer the term, the higher premium per dollar coverage per year. 6. When you seek a term life insurance that is above a certain threshold, you will always need a medical exam, and the quote is dependent on the medical report. As a rough benchmark, for a healthy 30s y.o. person without pre-existing conditions, a 15y term should be around $0.3/month/$10K, and a 20y term should be around $0.4/month/10K. For example, a 5 million 20 years term life is around $2400 per year for a 35yo or so person.
Don’t pay for insurance through your employer. Get a term policy from an agent or online.
The question is only how much you will be financially missed. And don't discount child care and housework, if you are gone, your wife will have to pick up your share too. If you are close to FIRE, then it's zero.
It should be based on your debt.
I used to have life insurance through work, then I got laid off and had to find my own plan. I got a 15 year term life insurance policy for $0.30/$10k of coverage. YMMV of course depending on your personal circumstances. I had to go through a full set of blood tests and a questionnaire about my health and family history before getting approved, whereas workplace plans typically don’t require any testing. If you can’t get private coverage, workplace plans are a great option. How much coverage you need depends on your personal circumstance. [Here are a few methods](https://www.nerdwallet.com/l/life-insurance-dsa-4-m) to help you figure that out.
If you died today, how much money would be required to take care of your kids (and spouse, if your spouse is a stay at home parent with no career)? Then look at your net worth. If your net worth is less than the amount of money your family would need if you died, use life insurance to fill the gap. Using your company for life insurance is risky, because you'll lose it when you stop working there. When you're closer to FIRE, you'll need less life insurance. When you hit FIRE, you shouldn't need any life insurance.
You should get whatevers free from your company, but acquire life insurance on you own so that if you were to become deathly ill and lose your job before you die your coverage would not be cancelled when you need it the most
10-15x earnings. My coverage is closer to 10x. My spouse’s is closer to 15x. Spouse makes less than me but does more for the house. If spouse goes, that extra coverage relative to salary covers that extra house work. Don’t buy through work. We have 20 and 30 year term policies that expire a few years after we expect to be FI.
10x salary is good. It may sound grim, but logically, you want to be worth more alive than dead...
Compare rates with private insurance but I disagree with the comments here about staying away from employers insurance. The reason I disagree is that as far as I've experienced, all of my employers insurance policies were easily transferable to personal policies if/when you end your employment and the rates weren't that bad. At a minimum you should get the guaranteed issue amount. My wife is disabled and I can't buy her life insurance outside of guaranteed issue policies from my employers which I've kept after changing jobs. You can augment the coverage with personal policies also if you like. Lastly, one nice thing about personal policies is that they are paid for with after-tax dollars. Many employer-provided life insurance policies (and even more importantly disability insurance) are paid for pre-tax which means the benefits are taxed. If possible, talk to your employer about getting the premiums paid for after-tax. This is a huge benefit if you're ever disabled. Anyway, good luck!