What kind of insurance should young marrieds have?

Question

My husband and I are 30 and 35 and in good health. He works and I'm a stay at home wife. I'd like to ensure that, should something happen to either of us, the other is 'taken care of' financially. What kind of life insurance policy should we consider? Are there other types of insurance policies we need like disability, etc?

Answer 1

I'm a 215 (life and health) insurance agent in the state of florida. Richie Rich is pretty much right. Term insurance is dirt cheap right now, thanks mainly to the fact that this year, the new mortality tables are being used for the first time. This means that a 60  year old man, for example, is now paying life insurance premiums equivalent to those paid by a, say, 40 year old man 40 years ago. So, older people can get more insurance for the same price. Having said that, I do have to disagree with Richie's contention that you need nothing but the term insurance.

While I would never convince a client that all of their insurance should be cash value/whole life policies, I do recognize that due to job changes, income fluctuations or changing life situations, you need at least a small part of your insurance program to be a "steady platform" that will never change. Remember that term insurance premiums are only guaranteed for a defined period of years. After that, you have to "renew" the insurance, and of course, 10, 15 or even 20 years later, that premium is much higher. What I ALWAYS recommend to a young couple, especially if they have no coverage, is that both take out a very small whole life policy STRICTLY for final expenses, should something happen to them. Depending on funeral costs in your particular area, this can be as little as $8000-$12000 in coverage.

The remainder of their portfolio will be ok in Term insurance, and this can be reviewed periodically as your situation changes (birth of children, purchase of a house, pay off your mortgage, increase/decrease in monthly income, etc. etc. Hope this helps.

Answer 2

Term insurance.  It's pure insurance and the most cost effective.  In my opinion, and that of respectable people outside the industry, cash value/whole life policies are worthless for middle america.

Disability is up to you, but I would suggest putting money in an emergency fund instead.  Have about 3-6 months worth. The longer the better.  Most disabilities last less than that and most insurance requires you be out for at least that long.

Disability and Medical should be offered through his work if they offer benefits.  That being said, anything they offer that is "free" on insurance, take it.

Stay away from accidental death and dismemberment, it's a joke.  Rarely ever pays out.

You are thinking right that both of you need coverage.  Just because you don't work, doesn't mean you don't contribute to the income.  To replace you with a maid to do the same household chores, would cost him about 40-50k/year (just guessing on price).

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Although I am a strong proponent of term only, I do know Dan's point about a whole life to cover just final expenses.  If you choose to go that route, make it a paid up whole life policy.  At least then you only need to make one payment and that is it.

When you choose a term, get the longest you can find.  They go out to at least 35 years level now.  It costs a little more now, but long term is worth it.  Especially if its guaranteed renewable and you get an uninsurable condition.

Answer 3

Level term life insurance is usually the best option.  Go to Yahoo Finance, click on "Personal Finance" and read about types of insurance.