Hello,

I am a 37 years old man with a 2 1/2 year old and an other kid on the way. I want to buy some additional (I have some coverage through my work but it is not enough). While I understand it depends on each situation, I am a bit struggling regarding the duration of the policy. I am wondering if people would choose 20 years or 25 years term life and why.

Thx.

 

  • rcdrury 1:02 pm on July 29, 2010 Permalink

    Typically, you should determine the objectives and the corresponding time frame, and choose a term sufficient to cover the length of the need; however, any life insurance need lasting more than 20 years is normally met more cost effectively using permanent coverage. My use of the words "typically" and "normally" is important here because the best solution for the need is dependent upon many factors. Life insurance is an intricate financial instrument, and is worse than useless if not implemented properly. Consult with a properly qualified financial planner or advisor (not an insurance salesperson).

  • Judy 1:02 pm on July 29, 2010 Permalink

    You need to have coverage until your kids get out of college.
    Also, keep in mind that paying down a mortgage and all debt is a method of life insurance.
    Plus, having very little in taxable accounts will get those kids into college practically free.
    So also sock away money in your 401Ks, tax-deductible IRAs and/or ROTH accounts for you and your wife.
    Money in those 529 plans are directly expected to pay for college – will reduce the amount of loans and grants you will qualify for.
    /

  • mbrcatz 1:02 pm on July 29, 2010 Permalink

    What’s the GOAL? If it were me, my goal would be to see my kids raised, and through college. That’s 21 to 22 years. So I’d pick the 25 year term, if I could. Now, when I was shopping around, the price on the 20 year term was significantly better, so I ACTUALLY bought 20 year term.

  • Imani Lucas, MS 1:02 pm on July 29, 2010 Permalink

    If education is your only concern, then the easy answer would be to select a 20 year term policy. However, you may want to carefully assess not only your potential education expenses in the event of your passing, but the affect that the absence of your income may have on your family and the amount of funding it will take for your family members to maintain their lifestyle after you pass.

    Life insurance professionals use 2 main methods for calculating the amount of insurance needed and the time period necessary. The first method is called the Human Life Value analysis. The Human Life Value calculation helps evaluate the financial contributions an individual makes to the family, or the financial loss a family would incur if one of the breadwinners died today. It does not account for final expenses, assets, and liabilities.

    A more detailed style of analysis is the Financial Needs Analysis. It helps determine life insurance need by evaluating how much will be needed at death to meet immediate obligations, and how much future income is needed to sustain the household.

    Before you decide you can analyze your situation for free at http://www.lifehappens.org .