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Message
Actual life insurance use from spouse
Posted on 9/15/24 at 1:52 pm
Posted on 9/15/24 at 1:52 pm
Does anyone have any actual experience with this? It’s a dark topic I know.
I’m talking in relation to having children and the financial need. Obviously the kids ages matter, so maybe laddered policies, but also the younger the kids are the less likely you can afford more and the more you want to put into things like retirement as a percent of your income.
Common sense says to do things like pay off the home and bills with the money. Decrease the amount of monthly payments. But honestly with 5% money market type of guarantees out right now almost seems better to just put 100% into that and use the income generated as a second income?
Thoughts?
I’m talking in relation to having children and the financial need. Obviously the kids ages matter, so maybe laddered policies, but also the younger the kids are the less likely you can afford more and the more you want to put into things like retirement as a percent of your income.
Common sense says to do things like pay off the home and bills with the money. Decrease the amount of monthly payments. But honestly with 5% money market type of guarantees out right now almost seems better to just put 100% into that and use the income generated as a second income?
Thoughts?
5
Posted on 9/15/24 at 3:08 pm to baldona
Like you say depends….
If spouse can’t afford mortgage , etc.- need to pay it off. You could theoretically use the interest to pay the mortgage- depending on the amount.
Say spouse has $2k mortgage, $300k balance, with $500k insurance money. The interest would cover
Mortgage- but you couldn’t use the funds for anything else .
If you pay it off, you have $200 k for emergencies, and making $10k year I. Interest
If spouse can’t afford mortgage , etc.- need to pay it off. You could theoretically use the interest to pay the mortgage- depending on the amount.
Say spouse has $2k mortgage, $300k balance, with $500k insurance money. The interest would cover
Mortgage- but you couldn’t use the funds for anything else .
If you pay it off, you have $200 k for emergencies, and making $10k year I. Interest
Posted on 9/15/24 at 3:36 pm to baldona
Hotter the spouse the less the need really is.
Posted on 9/15/24 at 3:57 pm to baldona
quote:
Thoughts?
Yeah. You could die tomorrow and not have the opportunity to do what you are thinking about doing.
Posted on 9/15/24 at 6:53 pm to baldona
I have first hand experience. My wife died in early 2020. I had a HS senior and sophomore. We bought 20 year term life policies soon after our oldest was born. I retired soon after her death. Her 7 figure settlement was my bridge to 59.5 before my IRA's could be tapped. I have only used a fraction of that payout. I intended to put it to work in the market but rising interest rates gave me a taxable 5% from the money market fund so I just let it ride. I did not pay off the mortgage because i could earn more in the market than my interest on the house. We also saved for college in a 529 the day they were born. College has been "free" so to speak. Both will finish with a surplus in their accounts.
Basically her life insurance gave me flexibility to retire without worrying about money.
Basically her life insurance gave me flexibility to retire without worrying about money.
This post was edited on 9/15/24 at 6:56 pm
Posted on 9/15/24 at 8:02 pm to NBR_Exile
quote:
Basically her life insurance gave me flexibility to retire without worrying about money.
Back in 1993 a cousin's husband dies in a auto accident leaving her with 3 little kids {10,8,and 4}. He had a $1mm term policy. She used the money to go back to school and get her teachers certificate reinstated. She bought a house near her parents who helped with child care and then went about the business of raising 3 really great kids. Made sure they got their college degrees.
One other thing the kids got SSI until they turned 19. Might want to factor those payments into your plans.
Posted on 9/16/24 at 4:23 am to bigjoe1
quote:
One other thing the kids got SSI until they turned 19. Might want to factor those payments into your plans.
We did. My wife was disabled for a couple of years so she and the boys received SSDI until she died and they were aged out.
Posted on 9/16/24 at 6:56 am to baldona
I got a laddered policy but calculated the amount based off my income that would be lost, so my family could maintain the same lifestyle they have now. Last thing I’d want is them worrying about selling the house and making other big life changes.
Obviously you don’t need a 100% income replacement because your personal expenses will drop to zero.
Obviously you don’t need a 100% income replacement because your personal expenses will drop to zero.
Posted on 9/16/24 at 7:21 am to NaturalBeam
quote:
I got a laddered policy but calculated the amount based off my income that would be lost, so my family could maintain the same lifestyle they have now
This is key. My cousin always said she wanted to raise the kids in the lifestyle they would have had if her husband were still alive.
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