What Life Insurance term should I get?
Tuesday, January 24th, 2012 at
8:46 pm
I am going to get some term life insurance. I am 33 and the sole provider for my family (35 yr old wife and 2 yr old son). Am trying to decide between a 10 and 20 year (or other?) term. Any advice?
Filed under: Retirement Planning
Like this post? Subscribe to my RSS feed and get loads more!
Look at 20 years. You may have more children. Even if you don’t your son may not be financially independent until his early 20′s. See if you can get a convertible term policy that allows you to convert to a new or longer term plan in future years. Or get term cover to retirement age. This will protect against loss of your income for your wife even if your son is financially independent.
Whole of Life is a LOT more expensive unless you go for the maximum cover option, which may mean your monthly premium may increase after 10 years and any cash value will be minimal.
When your son is 12, are you still going to need term life insurance? I think so. If so, you’ll want to buy that 20 year term.
It’s not actually that common to have a need for a term SHORTER than the length of time it takes your child to grow to an adult.
If you’re going to buy term, get a 20 year. This way, your policy won’t expire until your son is old enough to be moved out of he house. If you get a 10-year, he’ll only be 12 and still living at home when it expires.
My personal opinion is that whole life is the better option. It costs a little more, but it also develops cash value that you can use later to buy a paid-up policy.
20 year is definitely better, however, don’t forget to put a rider on your wife and son. Today, an accident is something isn’t supposed to happen. But it does. And you’ll want more on your child while in college, because in case of the unimaginable, you’ll have college loans and other bills to pay.
After 20 years your son will be out of college. Lock in the rates for 20 years. At your age the difference between 10 and 20 year term will be minimal.