by Ashley
I’ve mentioned it before, but we currently do not have life insurance. Yes, I know how irresponsible and dumb this is, particularly since we have children, yadda yadda yadda (<side fact: I googled whether its “yadda” or “yada” and urban dictionary had both spellings, so no consensus).
Well I’m happy to report that I finally got the ball rolling. But, BOY, does it feel like a PROCESS!
I was imagining going online, filling out some questions, getting the quotes, selecting the company I wanted, and BOOM – done. Not so much.
I went to Zander Insurance (who is endorsed by Dave Ramsey), filled out some questions, then got a call from a nurse who gave me an entire hour-long interview (I had pregnancy complications due to the twin pregnancy and – whoa – that opened up a whole rabbit hole of additional questions!!!). The next step is that someone is going to come to my house for an actual assessment, complete with blood draw and who knows what else?! Gulp. I might’ve shaved a few pounds off my weight. Clearly that will have to be rectified, given that I’m assuming they’ll actually weigh me. What all else is included in the home visit, aside from the blood draw? I’m healthy and disease-free, but it still makes me nervous for some reason. Ugh! I don’t even know why but I’m just dreading it (maybe the whole weight thing???)
Als0….not even sure that husband will be able to get covered (and he was the whole impetus for this, given his mystery illness). He hasn’t done the hour-long interview thing yet. Any knowledgeable readers who know about this type of stuff out there? Husband’s official diagnosis was “atypical meningitis.” Is that type of thing a deal-breaker for life insurance? I mean, I know meningitis can cause death and once you’ve had it, your odds of getting it again go up. This is gonna be a problem, right? Sigh.
We will press on. I just wanted to give a quick update about the status of this. I thought that by now we’d have it all wrapped up and I’d simply be reporting on the monthly cost and how it would influence our budget. Instead, we still have no idea if we’ll even be covered???
What I DO know is that we are signing up for a 20-year term life policy (which is much more affordable than a whole life policy), and although we haven’t “locked in” an amount yet, I’m thinking we’ll do $350,000 policies (for each of us). Ramsey suggests 10 times your annual salary, which would put us at roughly $500,000 each, but I feel comfortable with a lesser amount. What do you guys think? I learned a LOT from your comments about my car insurance coverage, so I’d love to hear your thoughts on this!
What would you suggest is good for life insurance coverage? Do you follow the “10 times your salary” rule? What guidelines have you used to select your own life insurance policy amount? What would you suggest for us?
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Freshly 40, married mother of two, working in academia. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!
I got life insurance awhile ago and was surprised about the length of the process too. Though, of course it makes sense. The person who came to the house turned out to be very nice. It was king of more than I expected in the home visit, because they do an EKG with the sticky things and everything, but they were professional and it was better than going to a doctor’s office. I imagine you will be able to get coverage but it just might be more expensive.
BTW: I am an academic and think you are doing a great job being positive about the whole job uncertainty thing, living a life while trying to get an academic job. I know how hard it is! It took me four years post phd to get my job.
Hey Carnyanna! Thanks for the comment, I really appreciate it (and the heads up about the EKG – whoa!)
Yeah, I think there’s an added layer of “difficulty” for us due to my husband’s job situation. It seems like most of my friends who have found employment had to be willing to move across the country and we’re just simply not willing to move anywhere. Plus, if/when we do move, my husband’s business is basically going to have to close so I have to consider what my salary would be PLUS the fact that husband will loose his salary. It’s a tough/tricky spot to be in. I actually just came across a job posting yesterday for yet another online part-time position. I joked with my husband that I’m going to build a whole career on this online part-time stuff, lol. This one sounds really awesome though – it’s a managing editor for an academic journal (not the editor in chief, mind you – it would be below that position). I’m going to submit an application. The journal’s content is right in my area of expertise so it looks like it’d be a good fit. The salary is a little less than what I’m used to making, but I think that might exclude more senior/experienced candidates so maybe I really have a shot. I’ll definitely keep everyone posted of my job status and any potential changes along the way. I’m still applying for “traditional” academic positions, too, so we’ll see what happens.
Whoa – wanted to clarify….we’re willing to move, but not willing to move ANYwhere. Only to specific places (we want to be around family).
Also, wanted to report on what I pay for my term life through USAA. I have two policies, one for 1 mill and I pay $151 a month and one for $250,000 that costs 51 a month. I am the sole breadwinner and wanted to make sure that my husband was taken care of if something happened to me. (He made a lot of sacrifices so I could get my wonderful academic job).
Sorry, I can offer no good advice on this (young, single, no dependents, only carrying ER’s $25k coverage), but I would say that even though it is a hassle and it is a process… ask your friends what they have. Different companies have different policies, and VERY different requirements. You may find one that’s just as good as what you’re looking at, but simpler and cheaper. Hope someone with better experience than me can recommend you a few. At work, we have ours through Lincoln Financial.
My home visit was a weigh check, blood pressure check, a blood draw and a pee test. I did do the 10 times rule and as an obese women mine is $30 a month for $500,000 term policy.
Whoa! 30 a month! I pay 120.00 for two 500,000 policies, myself (37) and my husband (33). He costs 1/2 as much as myself but that seems about normal because I weigh in at 160 lbs, 5’4 inches tall. We have zero pre-existing conditions or issues of any kind.
I am amazed that you are coming in at 30 a month. None of my quotes came within a mile of THAT number.
Morgan – do you have whole life or term life? Whole life is considerably more expensive. Most of our quotes (I looked at $350,000 and $500,000 for 20 year term) were in the $20-$30 range per person.
Ashley, We have 30 year term which will take both of us to just about 65 years old.
It’s entirely possible that I’m just casually getting screwed by my insurance company but ….well, lol, I’m a frugal crazy woman. Seriously. A professional frugal crazy woman. We got multiple quotes from multiple insurance providers. I’m talking… uh, over six different companies. I didn’t go with the cheapest company (in fact, I went with state farm because they hold the rest of my insurance and were only slightly more expensive than the others) because I was concerned, with a 30 year product, that the company would still exist in that time frame so I wanted a fairly stable company.
When I first started calling around about insurance the quotes provided were considerable lower… but in the end it turned out a lot of the agents were quoting their “best” price (the most preferred level) instead of truly giving me a real quote. Get those quotes in writing and see what “level” that you are being quoted at. Apples to apples is hard in the life insurance biz.
Additionally, even if you are not planning on insure yourself substantially, do yourself a favor and get the quotes on it. Even though you aren’t the bread winner now you hope to be a substantial provider in the future and it’s much cheaper to buy insurance when you are younger and lock in the lower rate.
Whole life is a fools game, IMO. 😀 The best bet is to insure until 60 – 65, retirement age.
I completely agree with it being difficult to compare apples to apples (and also the fact that the quoted price may not be the actual price in the end). We’re still in the process, so it may be that we end up going with another company. We’ll have to see. I do like your point about finding a company stable enough to be around for the long haul! My rationale for only doing a 20-year (which will only take us to age 50 and 51, respectively) is that we hope to be self-insured by that point. In other words, I would hope that we have the investments and capital to provide for one another when one of us eventually passes. So, my hope is to NEVER use the term life (since I sure hope we don’t die before age 50!!!) and to, instead, rely on our own financial investments when we get to that stage of life.
I agree that once you reach a certain point there is an assumption of self sufficiency, which is why we ended ours at retirement age, roughly.
The caution I would have for you is that ending it at 50/51 means that you are ending it just BEFORE your most productive financial years generally speaking. If you end the insurance before you are financially ready to leave the work force and something were to happen…. At 50 your children would just be going through college and many parents would like to financially assist at that point.
The other side is that, if you assume you will be making at least as much as you are now in general terms (though hopefully more!), but that inflation is eroding the cost of the payments, after year 20 the actual cost is fairly minimal. In our example, 120 per month, in 20 years the actual “cost” of that 120 is 60.00 per month. By the time we are at year 30 the adjusted value of the 120 is only 40.00. That’s assuming the average 3% inflation.
It’s also why more is better on the insurance amounts. While 120.00 in cost is only 40.00 in 30 years, 500,000 is only 200,000. Roughly.
Both points are well taken! Thank you for the insightful comments!
If you bank with a credit union, I would see if they have policies available to purchase as a benefit. We have $500,000 policies for the two of us at $22.50 every three months through ours. Less than a hundred bucks a year for peace of mind! It did not require a home visit or qualification process other than belonging to the credit union.
Hmmmm…..I have an account with a credit union back in Austin. They financed my first car and, even though the car payment – and car – have been history for years, they made me open a savings account (like $5 or $10) with them that I’ve never closed. I wonder if something like this could be done online, given that the credit union is Texas only and we, of course, live in Arizona.
My husband and I are both obese, which made getting life insurance tough for us. We applied to Xander (fellow Ramsey fan here), but we were turned down due to weight. We ended up getting insured through the same company that we have homeowners insurance with (and we get a multiple policy discount, too). Our home visit consisted of blood pressure, weighing us, blood draw and urine sample… I think there were also some questions that had to be asked in person for legal reasons. We were hoping for the 10x annual income plan, too, but because of our weight, our insurance is already expensive enough… so we settled for a $300,000 term policy on each of us, which will pay off our house, pay for funeral costs and pay off my husband’s last student loan. Being mortgage free, we figure that the surviving family will be able to get by on one salary.
Out of all of the people I know who have received life insurance benefits after the death of a loved one, no one has ever said, “I got too much money!” Most of them ran out of money much more quickly than they thought they would. Also, inflation is more likely than deflation, so you’ll need more money to cover future expenses.
Since you have twins, you’ll have double expenses that people with kids of different ages would have extra time to manage like drivers’ licensing courses, auto insurance, college application, testing and tuition/fees and continuing health insurance coverage.
Check out the comments on this article at Get Rich Slowly for some perspectives on how much is enough coverage: http://www.getrichslowly.org/blog/2014/06/27/ask-the-readers-are-these-good-enough-reasons-to-buy-life-insurance/
In some cases you can expect a lengthy review process and the will review all your medical records back 10 years. If those raise any red flags they may require additional follow ups at your expense. In generally there is not much difference in the premium prices between $350K and $500K. You have to figure for inflation as well, I would go with the higher amount since premiums started in your early years are cheapest.
Ashley I have really enjoyed your posts and am glad to see the progress you and your husband are making.
I strongly urge you to go for more insurance. When my husband and I were figuring out how much insurance we needed we settled on an amount that would allow the surviving parent the option to stay home with the kids (with good money management) until they turned 18 plus a reasonable amount for college tuition. This didn’t mean the surviving spouse wouldn’t work at all but that they had some flexibility in selecting a job for its fit with the family.
This may be a scary number but the idea of insurance is not to use it but to give you peace of mind. We are on the end of the spectrum with our daughters being one year from university and thank goodness we have not used this coverage but I don’t regret the money we spent at all.
Term life policies are very inexpensive making this possible.
Just my two cents..
I definitely appreciate your thoughts and advice! “Go for more” seems to be the consensus. We still have the (what turns out to be) lengthy application process to get through, but I’m glad we’ve got the ball rolling.
I can’t remember if the two of you have disability insurance or need to get that as well? At your ages you are much more likely to be disable and unable to work for a time due to illness or an accident. Something to think about but it is great that you are taking this step.
I thought disability only covers basically permanent disability (not short-term, which would be much more likely to occur)??? Clearly I still have a lot of investigating to do.
My husband has had cancer – and it came back, but I still expect to get life insurance for him. I hope that isn’t an unreasonable expectation, as he is soon going to be the sole breadwinner.
I vote for the higher amount. You’re young and haven’t had diseases, you should lock in a low rate. I wish we had life insurance before my spouse got cancer, but we didn’t since we have no dependants.
I’m so sorry to hear this! My thoughts are with you guys and hoping for a full recovery for your husband!
Has your husband ever been tested for lyme disease with co-infections? Dr. Carol Savage has done some amazing research on it and it closely resembles meningitis!
Yes, lyme disease was one of the things he was tested for when he was sick. Results were negative.