Comments on: We Canceled My Wife’s Life Insurance

By: Festival of Frugality #216

Festival of Frugality #216 — Tue, 09 Feb 2010 11:05:08 +0000

[...] Lean Life Coach of Eliminate the Muda presents We Canceled My Wife’s Life Insurance. [...]

By: Ken

Ken — Sun, 07 Feb 2010 01:49:36 +0000

Easy solution for LeanLifeCoach, complete a life insurance evaluator. Find out EXACTLY how much life insurance each of you needs, drop anything extra. Also, consider a family protection type policy, something that covers husband & wife under one policy. Generally all shared children will be included for no cost.

Also, make sure you aren’t being penny wise and pound foolish. It’s great your saving where you can, but are your savings allocated in a way that allows you to manage risk and return properly? You mentioned you had significant assets saved up – make sure you give them plenty of thought as well.

Great Post and cool website. Mine should be up next week.

Ken

By: The LeanLifeCoach

The LeanLifeCoach — Fri, 29 Jan 2010 15:02:16 +0000

@FinEngr – Great points on overlap especially with investment. I’m no expert there but I find it interesting when a person has several “index” funds that have lots of overlap. Last year I took close look at Targeted day funds and found extreme examples of this!

@Don-Thanks for stopping in! “One less bill” is the best part and the only thing that makes sense considering the insurance retained is sufficient for our needs.

By: Don@MoneyReasons

Don@MoneyReasons — Fri, 29 Jan 2010 05:39:13 +0000

I agree with you on this one! One less bill to pay!
Plus $250,000 sounds like a good safety net. I increased my insurance coverage too this year, but I still need to get coverage from a company separate from my employer’s insurance company.
.-= Don@MoneyReasons´s last blog ..Going With Paperless Statements, My Struggles Letting Go =-.

By: FinEngr

FinEngr — Fri, 29 Jan 2010 04:40:24 +0000

Agree with Evan on this one. Insurance is a tricky beast because you don’t want to be “caught with your pants down” but how much is enough? Life insurance is slightly more predictable than auto/health, so it wasn’t like you gambled more an educated assessment.

BUT, glad to hear it was because you noticed overlap and reassessed the situation. Now THAT’S some optimization

The same practice can be translated to other investments as well.

How many different funds do people have at different brokers. How many people have looked through their prospectus’ at the top 10 holdings.
I’ll take a stab at some overlap: Hewlett Packard, Johnson & Johnson, Exxon Mobil…

By: The LeanLifeCoach

The LeanLifeCoach — Fri, 29 Jan 2010 01:28:42 +0000

@David – This detail is starting to get a little weird personally because I obviously don’t like the thought about losing my best friend and wife. But looking at the possibility from a purely academic perspective there is also the offset of significantly lower costs with the loss of my wife. Our families expenses for food/clothing/medical etc.. would all go down. As long as my income remains similar there are no concerns. Even if it were to fall we also have additional financial reserves. The only potential deal-breaker is catastrophic medical issues. I’m not sure anyone has figured out how to address that! I saw Matt Lesko last night say 50% of bankruptcies are due to medical and of those 70% have health insurance!

By: david @ MBA briefs

david @ MBA briefs — Fri, 29 Jan 2010 01:16:25 +0000

Doesn't sound like a bad idea to me. The policy is for your wife who is a stay-at-home mom, and your kids go to school all day, right? So the policy doesn't have to replace her income or cover the cost of child care in the event of her passing, unless you opt for some after school program. If you were to become a widower you might need additional help around the house, you'll probably eat out more often, and incur a myriad of other small charges as a result of her not being around to help you but that shouldn't be much more $25k, do you think? And $250k/$25k/yr = 10 years. .-= david @ MBA briefs´s last blog ..Do positions of power corrupt people or attract people who are already corrupt? =-.

By: The LeanLifeCoach

The LeanLifeCoach — Fri, 29 Jan 2010 01:06:36 +0000

@Evan – We already apply many other techniques to save wherever we can. It’s actually more like $10/month. The policy we kept will cover well over 100% of all our debt and likely provide more than enough to cover college for the kids as well. We really don’t have the need. If I were to pass away, it’s another story and why we have a substantially larger amount of insurance coverage on my life.

@Tracy – Somehow things have gotten way too complicated. As we experienced it’s easy to lose control and end up over-paying unnecessarily.

@Bytta – My wife is a stay-at-home Mom and has the most important job in our family. She is irreplaceable! From a financial perspective however, now that our kids are entering their teens, I simply don’t need much. As mentioned above the policy we kept would be plenty to address our needs with money to spare.

By: The LeanLifeCoach

The LeanLifeCoach — Fri, 29 Jan 2010 00:58:24 +0000

@Kim – I am very sorry to hear that you lost your father at such a young age. You’re comments are not morbid. Your experiences are part of life and you willingness to share will help improve the decisions that others make. Thank you so much!

By: Bytta @151 Days Off

Bytta @151 Days Off — Fri, 29 Jan 2010 00:52:24 +0000

Interesting! I’ve been thinking about cancelling my Income Protection (or disability) insurance since it costs me around $500/year and the likelihood is pretty small. It’s probably a little redundant if combined with the life insurance as well.

Just curious though, if it only costs you $100/year for a $100k cover, why did you cancel it? The thing that is very likely to happen is your wife and you are going to live for another 40 years so that’s around $4000-$6000 (including inflation) cost for $100k cover (if we’re talking cold math here).

I tend to pay extra $10-20 in my car insurance so they increase the cover value by $1000-2000. In that case, I think it’s cheaper to invest in that extra $10 because who knows what sort of extra cost involved in losing a car. The same goes with my home insurance. Anyway, I tend to be overly cautious which might have cost me some money.
.-= Bytta @151 Days Off´s last blog ..Day 11: Designing Your Life with Savings Snowball =-.