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Life Insurance For the Young Married. In your opinion do Jeff and Ann need additional insurance? why / why not?

Jeff and Ann are both 28 years old. They have been married for three years, and they have a son who is almost two. They expect their second child in a few months Jeff is a teller in a local bank. He just received a $60-a-week raise. His income is $960 a week, which after taxes, leaves him with him $3,200 a month. His company provides $50,000 of life insurance, a medical/hospital/surgical plan, and a major medical plan. All of these group plans protect him as long as he stays with the bank When Jeff received his raise, he decided that part of it should be used to add to his family’s protection. Jeff and Ann talked to their insurance agent, who reviewed the insurance Jeff obtained through his job. Under Social Security, they also had some basic protection against the lost of Jeff’s income if he become totally disabled or if he died before the children were 18. But most of this protection was only basic, a kind of floor for Jeff and Ann to build on. For example, monthly Social Security payment to Ann would be approximately $1,550 if Jeff died leaving two children under age 18. Yet the family’s total expenses would soon be higher after birth of the second baby. Although the family’s expenses would be lowered if Jeff died, they would be at least $500 a month more than Social Security would provide. In your opinion, do Jeff and Ann need additional insurance? why or why not? i am a bit confused on this topic. @@

Public Comments

1. They each need additional insurance. From your example, I have assumed that Ann does not work outside the home. Jeff needs to provide enough life insurance to provide for Ann and the children in the event of his death. If you multiply 18 years x 12 months/year x $3200, the minimun she will need to replace his income is $691,200.00. That figure does not adjust for inflation, increase in income ,childrens education, etc. In my opinion, he needs to purchase at least 1 million in term life insurance in order to provide for his family in case of his death. At his young age, the premium is very low. Ann should also purchase an equal amount of term life insurance in case of her death. Were she to die while the children are young, Jeff will need income to provide for daycare, he might need household help, etc.
2. Maggie's post was very good. Your argument based everything on you dying by age 46 or the age of your 2nd child reaching age 18. After the children are over age 18, no social security for them or your wife. For survivors benefits for the wife after age 18, I believe she would have to be age 60 to qualify. So there would be a 14 year gap there. Most children need to go to college to get a good job and the amount is anywhere from $10,000 to $20,000 per year. You are also assuming that Jeff will always work for this bank, but the figures I have read is that the average person today before retiring now has had anywhere from 10 or more jobs/companies they have worked for, be it on their own by finding another job with more money/benefits or thu no fault of their own, laid off or fired. Some benefits you can take from a previous employer, but at your own cost and the life insurance maybe free or paid at around 60 or 70% by the employer and the employee only pays a fraction for that life insurance. So even if you can keep, you would be picking up 100% of the premium. The medical benefits would be great, but would have to be continued under Cobra which is around 102% of what your employer pays for only 18 months, which could run around $12,000 to $18,000 a year for a family. After 18 months, then the wife would have to find a plan of her own for herself or the children. And to state that the expenses go down after he dies does not make a lot of sense, since you still have a mortgage, insurance, utilities, car, food, childcare etc that will still be the same. I have heard that you need enough to pay off the mortgage, college for the kids and any other expenses you currently have as a minimum. And like the other poster stated, the wife should get life insurance on herself, since when she is not there, you may incur a lot of expenses that you are not aware of. good luck