How much life insurance do I need, can I be overinsured?

Question

Lately, I've been thinking alot about my death, I have two sons and I don't want my passing to leave them in debt, in fact i would rather they both ended up with something. I have a policy thru my job and I am able to add to it if I want. I am going to talk to HR about that, but I want something outside of that.

Answer 1

Depending on the ages of your sons and how much they depend on you. "To leave them 1 million dollars and they do not know how to handle that is like leaving them Ford Motor company to run at the age of three. You might look into a will and a Custodial Account for your children. An anunity is a good option to pay out money over time.

As for how much.

Where will they live and that cost.

Are they going to go to college and where for how long?

After that they could need another boost.

Answer 2

Me? I would recommend dropping your coverage at work to cover funeral expenses and a couple small bills- no more than 15k.

Check with an agent who will do a complete financial profile for you. They'll take a look at your current financial situation, ask you where you want to be, where you want to go, how aggressive do you want to be and when you want to retire.

A plan will be put together that shows the absolute best for you at this time. It'll show what you need for insurance. Usually it is recommended that you have 10 times your yearly salary- you can't do this thru work!

Answer 3

If you are asking for amount, I will try and give you a figure:  First, you will need to be able to payof your debt, including house, car, credit cards, medical bills, and funeral expenses.  If you want to leave something for your kids, you can estimate that.  Term policy is usually the way to go.  You could probably get $100,000 worth of coverage for $400-$500 a year.

Answer 4

1. It depends on what needs you wish to cover. 2. How much you can afford!

Truthfully you need a life insurance agent or broker that you can trust. They will discuss not only death benefits but living benefits as well. Group insurance is great, but the premiums are based on numbers in your group and allowances are made for uninsurable employees to be covered within the premiums charged. If you are in good health you can probally buy term insurance cheaper on your own, rather than the group.

Some of the needs you may want to cover are

what assets are you paying on that you wish to pass to your son if you die. The unpaid costs here should be covered, also you mentioned educational costs, do you wish to leave a lump sum of $ to your son or an income he can't out live to remember you by? Are their state inheritance taxes, probate charges, etc. Remember insurance is something that should pass through to him quickly and tax free, depending on your State Laws.

Also, if you live through his college years, etc.

do you want some of the money you paid back? Or do you wish to quit paying premiums at some point, but leave part or most of the coverage there until you death does occur?

These are things that a licensed professional can talk to you about and help to educate you.

When they are through, you should be able to tell them the amount you need, then discuss the cash values later or return of premiums, if you live.

Answer 5

Depending on your age, level term life insurance is usually the best way to go.

Answer 6

you are right you can't ever be over insured but you can have more insurance than what you can afford.  Insurance thru work is good because is very inexpensive but you can not relay on it.  Most insurance thru work will terminate when you retire. Or what if you quit your job?. Things happen.  Plus the older you get the higher the premiums will be. You are young and can get a lot of coverage at an affordable price, plus you can still qualify (assuming you are in good health)  If you are going to speak with HR i would also ask what are the steps your family would have to make should something happen. How soon do they pay the claim? what documents are needed? who is the person to contact? so that you can give this information to your sons.  I suggest you contact your homeowners/auto agent so that they can get a quote for you, you may get additional discounts if you go that route.. Don't wait too long,  make sure you do it soon while your healhy... God bless

Answer 7

Yes, you do need life insurance outside of your job unless you have a guarantee that you'll always have that job and they'll always offer life insurance.

There are many formulas for determining how much to have. I generally recommend you have enough insurance so that if placed in an income producing account the income from the account will at least equal your annual salary. This will give your son's money to live on until they reach majority age then the account can be divided among them.

EDIT based upon your additional details:

Because of the age of your sons you'll want enough to pay for their college education and living expenses through college. That amount could include enough to pay off the mortgage.