r/Insurance • u/Impressive-Peak-6596 • Aug 22 '26
Life Insurance Do I need additional life Insurance?
had a child recently. and I have a ~500k policy through my employer.
Do I need something additional, if the policy is ”portable”? I believe if I leave the job, im able to keep the policy if I continue paying on it.
Im just curious if that’s enough. my wife works, also has a policy.
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u/demanbmore Former attorney, and claims, underwriting, reinsurance exec. Aug 22 '26
If you passed tomorrow, would that amount be enough to pay off all debts (mortgage, car loans, etc.), plus fund your child's education, plus enough to cover household expenses and childcare for at least a year or two?
There's all sorts of formulas for how much life insurance one should have, but I just add up all the debt plus the likely costs of education plus at least a year or two of family expenses and use that as a floor. Maybe add some more just to make my family's life easier for a good long time, at least from a financial perspective.
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u/Impressive-Peak-6596 Aug 23 '26
So the amount is more than enough to pay of mortgage, any other liabilities, funeral etc.
However, in terms of being extra safe, I may need to get another term life of some sort
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u/Flash120 Aug 23 '26
Get something not tied to work. Too many variables there. Work could go under, you could get fired, they could take away benefits if times are tough, etc.
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u/QuriousCoyote Aug 22 '26
That's enough for some people, and not enough for others. The value has more to do with your needs.
How would your spouse manage without your income and help? Is that enough to pay off your mortgage? Would she use it for some other purpose?
If it's truly portable, that's good. And you probably get a pretty good rate, too, if you're healthy.
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u/Impressive-Peak-6596 Aug 23 '26
My wife has a good job, and the amount is enough to pay off all of our debt, mortgage included, and still some left over.
I’m debating possibly a term life policy that would carry until my son is an adult.
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Aug 23 '26
[removed] — view removed comment
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u/Impressive-Peak-6596 Aug 23 '26
Thanks, I’m considering a term life policy for another 500k after reading these posts
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u/wratz Aug 22 '26
Work policies are usually not enough. Get a policy you control with full upfront underwriting. A lot of cheap policies will underwrite if you die and they almost always find some reason to deny the claim.
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u/PerceptionOk1941 Aug 22 '26
That all depends. Does your policy amount cover all your debts/mortgage/whatever cost for your child coverage such as college/school and whatnot. You're going to need to sit down with your spouse and figure out expenses out. I had to do the same when I turned 40.
Portable? Yes that means you can take it with you. I'm assuming it's whole life or variable. You should look into term (you might just want 20 years to make sure the kid is launch). You should look at policies outside of your employer. It all depends on your purpose with life insurance. Remember it's only tax free money when you're dead...
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u/CourserofMerit Aug 22 '26
Your basic back-of-the-envelope calculation.
Assume $50k for final expenses. You don't know what the people you leave behind will want, so just figure that much for them.
That leaves $450k to raise the child, pay for college (or other) and pay for whatever transition arrangements your spouse will need. In particular, a single parent has much less time than a married parent, and so will need to pay for child care and household help (the maid every household had 100 years ago), an things like that. Guess $50k a year (probably going up faster than inflation in general). You're underinsured by at least a half a million. (And your spouse should have a similar sized policy.) And you probably need even more for college.
As to the portability of your employer sponsored insurance, that's a group policy that is a contract between your employer and the insurer. You are not a party. You should figure the only thing that's guaranteed is what state law mandates.
In particular, many (but I don't believe all) states grant the employee a conversion right for group life insurance. That means that if the policy is terminated for any reason, you have the right to purchase individual life insurance from the insurance company, usually at standard rates. But if your state doesn't require that (or the policy is governed by the law of another state), you could just be out of luck.
EDIT: This assumes US. If some other country, this could all be wrong.
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u/Spiritual_Wall_2309 Aug 23 '26
College fund, mortgage, living expenses as supplement assuming your partner can work. You can multiple to the extend up to your kid to age 18.
500k is a good start, but possible more if you can pay for it. Just do term. No need to add any investment add ons to your life insurance.
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u/isvaraz Aug 23 '26
My employer policy is portable, but the rate isn’t. Once you leave the company, you typically pay more, you just don’t have to requalify. Look into your policy. Mine has rates that increase with age - it’s not a fixed rate based off your age when you leave, it changes to more as you age.
If you get a personal term life, you’ll have a fixed rate. Many term life policies have an option to convert at the term. Meaning, you continue to pay the same monthly rate indefinitely (till death or cancellation) for a significantly reduced payout. Fake numbers, but let’s say you pay $50 a month for a 30 yr term $500k policy. In 30 yrs, you can then continue to pat $50/month but the payout would be $50k.
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u/BubblyRhubarb9611 Aug 23 '26
No. That policy is specific to your employment. Once the job ends so it’s your policy as it is group policy. You will have to find a new insurance with your new employer or on your own
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u/ARoseandAPoem Aug 22 '26
We have one with work and then one outside of work (20yr term) Depending on you age and health status a term policy could be fairly cheap. It’s really nice to have that peace of mind that job termination makes no difference. We’re in our 30’s. I wouldn’t mess with whole life, that’s essentially a scam.