Personal Finance

Should I have life insurance?

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  • Jun 4th, 2016 7:12 am
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[OP]
Deal Fanatic
Nov 22, 2015
5781 posts
5284 upvotes

Should I have life insurance?

I'm 25, married, pretty much debt free, no kids.

Work offers life insurance for $300K coverage at $89 per year.

I know I don't really need it. But at $89 a year it doesn't hurt to have some right?
41 replies
Deal Guru
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Mar 23, 2008
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Edmonton
How well would your wife be financially if something was to happen to you?

C
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Nov 9, 2013
4033 posts
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Edmonton, AB
superfresh89 wrote: I'm 25, married, pretty much debt free, no kids.

Work offers life insurance for $300K coverage at $89 per year.

I know I don't really need it. But at $89 a year it doesn't hurt to have some right?
Do you have a mortgage? Do you plan on having kids? Does your wife work?

Life insurance is insurance against against lost of income, in the event that you die. If you have ongoing financial obligations (i.e. a stay at home wife, mortgage or other debts) you should have life insurance to cover at least the burden of the debt. If you plan on having kids in the future you should get life insurance as kids cost money and if you die you can't support your family.

If you and your wife are financially comfortable, have no debt and never plan on having kids then I don't think you need life insurance.
[OP]
Deal Fanatic
Nov 22, 2015
5781 posts
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CNeufeld wrote: How well would your wife be financially if something was to happen to you?

C
Right now? She would be left with a mortgage-free single home (approx 380K value) and approx 25K in savings. She earns about 45K/year
Deal Guru
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Mar 23, 2008
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And how would her quality of life be affected?

For $89, I'd probably just do it without worrying about it too much.

C
Sr. Member
Sep 23, 2013
509 posts
288 upvotes
Windsor, Ontario
superfresh89 wrote: Right now? She would be left with a mortgage-free single home (approx 380K value) and approx 25K in savings. She earns about 45K/year
Why would she be left with a mortgage free home? Do you already have life insurance to cover the mortgage? If it's attached to the bank's mortgage agreement, be very careful.

Regarding the work plan, by the sounds of you, you might not need it - just based on the information I see in this post. It's hard to give answers on it without a lot more information, the good thing is the posters above have done a great job giving you information to consider.

The problems with a work plan however are that you have no control over the policy. At any moment your employer can cut the benefits back, you may also find a new job in which case you lose the benefits. Even if you are allowed to transfer the benefits to an individual plan, one thing most people aren't aware of is that any quote you receive is based on "Smoker Rates" because the company is not asking any other medical questions.

Hope this helps.
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Dec 14, 2007
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superfresh89 wrote: Right now? She would be left with a mortgage-free single home (approx 380K value) and approx 25K in savings. She earns about 45K/year
$89... for $300K is very reasonable. It's a Latté + pastry at Starbucks once per month. $25K would go quickly, especially on a $45K income. She may take a few months off to grieve, or take time off to arrange her affairs. Being mortgage free is good, but a mortgage does not provide INCOME, which is what she will need.

Do you need it? NO, NO ONE needs life insurance... because dead people are pretty much no maintenance. Would your wife need it? She could do without it. Would it ease the stress of transitioning to widowhood a little bit without providing a lifetime income? Yes, and $300,000 would give her options like creating a diversified portfolio that provides income, or buying a rental property if she so desires.

Note that this is coming from someone who thinks most people are OVERinsured. $89 for $300k payout is peanuts.
Deal Guru
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Mar 23, 2008
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Oh, and before you do that, maybe investigate how much it would cost you on your own. Your life insurance will never be cheaper than it is right now, so it might make sense to lock some in longer-term. And as others have mentioned, you could lose the work provided insurance at the whim of your employer.
Deal Addict
Mar 8, 2013
2706 posts
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The complication about life insurance is that in the future when you need it, such as when you have children or other financial obligations, you may not be able to get it (because of a health problem). If you get it through your employer, you may not be able to keep it if you leave the company, go on sick leave, etc. It all depends on the terms of the policy. So when you DO think that you need life insurance, you should go through a broker who has access to many life insurance products.
Newbie
Mar 1, 2013
15 posts
8 upvotes
For $89 take it no doubt,if something changes at work deal with it then.You are sitting pretty good as is but what is 89 bucks over a year,too good of deal to turn down.
Deal Addict
Dec 12, 2009
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Toronto
atomiton wrote: $89... for $300K is very reasonable. It's a Latté + pastry at Starbucks once per month. $25K would go quickly, especially on a $45K income. She may take a few months off to grieve, or take time off to arrange her affairs. Being mortgage free is good, but a mortgage does not provide INCOME, which is what she will need.

Do you need it? NO, NO ONE needs life insurance... because dead people are pretty much no maintenance. Would your wife need it? She could do without it. Would it ease the stress of transitioning to widowhood a little bit without providing a lifetime income? Yes, and $300,000 would give her options like creating a diversified portfolio that provides income, or buying a rental property if she so desires.

Note that this is coming from someone who thinks most people are OVERinsured. $89 for $300k payout is peanuts.
OP should price out a funeral and see how much of that $25K would be left when they die.
CanofCorn24 wrote: For $89 take it no doubt,if something changes at work deal with it then.You are sitting pretty good as is but what is 89 bucks over a year,too good of deal to turn down.
Agreed. The OP should price out separate life insurance. It is cheap when you are young and it is not tied to having a certain employer. (succession planning)
[OP]
Deal Fanatic
Nov 22, 2015
5781 posts
5284 upvotes
ROYinTO wrote: OP should price out a funeral and see how much of that $25K would be left when they die.


Agreed. The OP should price out separate life insurance. It is cheap when you are young and it is not tied to having a certain employer. (succession planning)
There should be at least 25K. If I don't die within the next 2 years, this number should increase to around 70K.

Funeral expenses should be covered by my basic life insurance at work - approx 40K coverage.
Deal Addict
Dec 12, 2009
4682 posts
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Toronto
Do yourself and your wife a favour. The $89/ year is cheap to buy as an interim measure.

Then take the time to learn about the various life insurance / disability products that are available and how they can affect your financial position in the future. There are products that give you cash back at a certain age. Sounds like you can afford to buy insurance when you are young, the older you get the higher it goes. $89 might buy me a month of <$100K insurance at this stage of life.
Poop happens and people die or are disabled at all stages of life. So far I've been lucky - can you predict the future?
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Dec 27, 2013
1938 posts
750 upvotes
I have a couple if mil sitting in the bank, my annual salary is more than I deserve, all my relatives are independently wealthy, etc... I've been offered $500K life insurance for $19.99 per year. Should I take it? Oh.. And a friend of mine can get me a Mazerati Quattroporte GTS for under $30K. Should I take that deal as well? :D

No, wait... Let me start a new thread in order to ask all these important questions!.. :facepalm:
Deal Fanatic
Nov 24, 2013
6214 posts
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Kingston, ON
$89 is cheap. For some context, I got my first term (T10) policy at age 21 - $120/yr for $100k coverage, even at T10 and a young age.

Take it. It sounds like you're able to take advantage of pooling risk with your coworkers, and it gives your wife flexibility in the unlikely event you die.
Deal Addict
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Dec 14, 2007
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Based on replies... it seems like OP has already decided not to get the insurance but wants RFD to confirm his bias.
Deal Addict
Oct 18, 2014
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HK
atomiton wrote: Based on replies... it seems like OP has already decided not to get the insurance but wants RFD to confirm his bias.
Agreed. I'd hate to be the wife.
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Sep 9, 2012
4358 posts
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Oakville, ON
superfresh89 wrote: There should be at least 25K. If I don't die within the next 2 years, this number should increase to around 70K.

Funeral expenses should be covered by my basic life insurance at work - approx 40K coverage.
Aside from immediate costs such as funeral, keep in mind that there's ongoing costs that arise because you won't be around to do "your share" around the house.

Assuming there's the classic split of "pink" jobs and "blue" around your house, is your wife going to be able to do them all or will she have to hire people to do them? That can eat into her savings and income to hire people to cut grass, shovel snow, some appliance repair, repaint a room, etc. Your income will also be missing when it's time to re-shingle the roof, replace furnace, replace the car, etc.

A lot of widows get by OK at first, but are on a gradual decline towards being broke as these little things and the odd bigger expense eat away at the savings and relatively lower income. For $89 for $300,000 I'd take it and reconsider in a few years when savings are a lot higher.
Deal Addict
Aug 31, 2014
1488 posts
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YVR, BC
your wife makes 45k/yr and the mortgage is taken care of?

the rest would just be fun money IMO......you don't need it, but if you want to give your wife a nice lifestyle after your gone? knock yourself out

$89/yr or month? $89/yr is cheap! especially if you are old.
Sr. Member
May 29, 2006
632 posts
136 upvotes
Take the insurance .... If for no other reason then to make your wifes next boy friend a happy happy man :D

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