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This is absurd. Just because a single spouse can't cover the expense of all joint obligations doesn't mean there are problems. My wife certainly couldn't cover all expenses from current cash flow. We do have savings that would enable her to meet the obligations but instead of forcing her to burn savings, that she on her own will not be able to rebuild at the same accumulation rate would be poor planning. Instead the risk is mitigated Id say relatively cheaply
Well, I think the wise thing is to live such that you could cover your bases with one person's salary. Use the other for fun, accelerated savings, etc.
But this country isn't in dire straits with personal finance because other people think like I do, that's for sure.
Well, I think the wise thing is to live such that you could cover your bases with one person's salary. Use the other for fun, accelerated savings, etc.
But this country isn't in dire straits with personal finance because other people think like I do, that's for sure.
So if I made 150k and my wife made 40k we should live like we make 40k total? Again your overall stance is absurd. Should people be more conservative with money? Sure. But your suggestion that if people need life insurance to help meet expenses, that something is wrong, is well redicilous as I already gave a previous example of how a spouse could meet obligations through the spending of savings which isn't wise if it's not needed
What is your theory behind this then? Just how much insurance should someone have since you seem to be the expert??
I have never once heard of having life insurance based on discrepancy in income only. It's far more intricate than that. Say you have a couple, wife makes 80K, husband makes 40K. You are suggesting that they not get life insurance on the husband just because she makes more than him. Ok, fine, but what if they also have a mortgage that she can't cover on her salary alone?
Well then they have much bigger* risks to worry about, e.g. divorce.
Quote:
Originally Posted by Qwerty
She has now lost her husband and now has to deal with selling their house and moving who knows where, sorry, that's just cruel. Not to mention that funerals cost money, maybe he was really sick and now she has to deal with a bunch of medical bills on top of the funeral costs.
A decent emergency fund or small policy should cover it. You don't need to spend $100k on a funeral and burial!
Quote:
Originally Posted by Qwerty
Then, to further your theory, what about a stay at home parent. Based on your theory, you shouldn't need life insurance on the stay at home parent because they don't make any money, right? Well, how about the new costs the other parent has to cover for day care or maybe that parent has to take a lower paying job because he needs to have better hours or what if the one parent dies right before the kids go off to college and the plan was for the stay at home parent to work full time to help cover costs.
I said "If you don't have kids". I'd be very interested to know how exactly you end up incurring daycare bills on non-existent children...
This is terrible advice. You need to look at expenses/obligations if I make 40k and my wife 80k and we spend 90-100k my spouse would still be in need. Conversely if I make 40k and my wife does too but our expenses are 20k it might not be needed
Well then how did the spouse ever survive when they were still single?
You can certainly concoct situations that amount to exceptions, this is why it's a rule of thumb. You could do the same with other financial rules of thumb, e.g. DTI for a mortgage - this would depend on other expenses too, yet you don't seem bothered by those rules of thumb so why is this any different? Are you saying lenders should ignore DTI also because it depends on other expenses?
You also are forgetting that expenses will go down with only one person compared to two, because you don't need as much food, gas, housing, etc.
Well then how did the spouse ever survive when they were still single?
You can certainly concoct situations that amount to exceptions, this is why it's a rule of thumb. You could do the same with other financial rules of thumb, e.g. DTI for a mortgage - this would depend on other expenses too, yet you don't seem bothered by those rules of thumb so why is this any different? Are you saying lenders should ignore DTI also because it depends on other expenses?
You also are forgetting that expenses will go down with only one person compared to two, because you don't need as much food, gas, housing, etc.
Prior to being married and having a HH income expenses and obligations are often less. Hence the reason it's not only a income replacement issue but rather income/obligations
How are you surmising I don't have issues or do for the matter with dti? That's a strange assumption to make
Some expenses may go down but typically not enough to offset a total loss of an income.
Prior to being married and having a HH income expenses and obligations are often less. Hence the reason it's not only a income replacement issue but rather income/obligations
How are you surmising I don't have issues or do for the matter with dti? That's a strange assumption to make
Some expenses may go down but typically not enough to offset a total loss of an income.
Your advice is flat out poor
I'm only assuming that two people have expenses not less than 1.5X what one would have if single. Not 2X. Even if it's only 1.3X or 1.4X, the difference can be considered a "deductible".
If they are seriously so close to the edge of financial ruin, what about divorce?
I'm only assuming that two people have expenses not less than 1.5X what one would have if single. Not 2X. Even if it's only 1.3X or 1.4X, the difference can be considered a "deductible".
If they are seriously so close to the edge of financial ruin, what about divorce?
I'm not sure what your assumptions are but just because a spouse makes a multiple should be a blanket recommendation to not have life insurance
Have you ever gone through a divorce? Very often they tend to be rather challenging financially speaking often leading to extreme hardship or bankruptcy(8% of all bankruptcies are due to divorce). There is insurance for that too although it can be rather quirky and expensive as opposed to term life that's very straight forward and relatively inexpensive
I'm not sure what your assumptions are but just because a spouse makes a multiple should be a blanket recommendation to not have life insurance
Have you ever gone through a divorce? Very often they tend to be rather challenging financially speaking often leading to extreme hardship or bankruptcy(8% of all bankruptcies are due to divorce). There is insurance for that too although it can be rather quirky and expensive as opposed to term life that's very straight forward and relatively inexpensive
The argument is only that one should already have a reasonable cushion between fixed expenses and income, and that the same cushion that can protect you from ruin in a divorce would also do the same with a death, if the lost income is not too high. That's all.
Of course if one is going to be spending most household income on fixed bills, which I would argue is a bad idea because of risks such as divorce, then sure, get the life insurance.
We have a term on myself and a smaller whole life on my wife.
I did the term on me because you can get more for less, but sadly we aren't the best savers. So the idea about investing the difference between term and Whole life sounds good, but not all can (or will) make it work in reality. We did the smaller whole life on my wife because the amount was affordable and basically forces some savings as it does have a cash value that grows. Plus in later years we could borrow against it.
So a combination may be better for some. I recently discovered I can convert part of my Term to a whole life and I may do that. Part of the problem there is I am healthier now then I was back when the Term was issued. So I may be better off just adding a small Whole life policy.
The company I work for has also offered to potentially pay for a whole life policy. Not really sure if there would be a way to create a term and then have the company contribute more to my Simple IRA plan. But I don't want to hijack the OPs thread either.
The example was she made 80k and he made 40k.
Please go back and reread.
That being said, I think term life is important.
Again, what if they use part of HIS income to cover their mortgage. It's not an unreasonable situation and what if they live in a high cost of living area where 80K is not going to cut it....
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