[300bps]

I was happy to make a donation. This hits close to home because my wife was diagnosed with Stage 0 Melanoma-in-situ when she was 35 years old. We have three kids of our own and imagining them growing up without their mother is terrifying. Fortunately, we caught it at Stage 0 though which has a 100% cure rate. So let me stand up on the soapbox for a minute:

Everyone should go to a dermatologist every year for an all-over skin check starting when you're in your 20s. That's what my wife did and it's what I started when I was in my late 20s. It's literally the difference between dying young and growing old.

To stay on the soapbox for a minute, everyone should really have at least $500,000 in life insurance when your wife is pregnant with your first child. I pay about $1,500 per year for $2.0 million in life insurance above what my employer supplies me (3x salary). You really, really need term life insurance outside of what your employer offers. Just think - if you get very sick and lose your job, you don't want to lose your life insurance as well. Don't get whole life - it's generally a rip off. Just get term life insurance. I have a ladder of 10 year, 20 year and 30 year policies that expire as I get older and need less life insurance. In fact, my 10 year term policy just expired a couple months ago (my oldest son is 9.5).

Also, get disability insurance outside your employer's policy as well. Policies supplied by employers are typically worthless. It's generally good to get an "own occupation" policy because otherwise you can be denied payment because you're able to work a McDonald's drive-through even though you've been a surgeon your entire life.

[sbhere]

Yes. This. The dermatological point is very, very helpful, but the rest of it is a grand-slam home run.

The sadness of early death is something way too many people have to embrace ... but there is also an element of preparation. For all the articles about preparing for a proper launch, preparing for VC, preparing for #whatever on HN, this is an element glossed over in most every circle I have ever been in.

To everyone: Get Term Life Insurance. To everyone: Get Disability Insurance.

Do your research, and be prepared - because life is coming regardless of your level of preparation.

[franl]

Great points all around, thank you for making them! Please don't help perpetuate this myth about whole life being a "rip off" though. Your statement is semi-accurate, but a bit misleading.

Don't get whole life - it's generally a rip off

Yes, if purchased from a non-mutual, financially shaky insurance company, it's quite likely a bad idea.

However, when purchased from a financially strong mutual insurance company (Northwestern Mutual, Guardian Life, etc.), it can make a great complement to term life insurance (and can be beneficial to the overall financial plan for a number of reasons).

One wouldn't want to "fully" insure themselves with whole life (that'd be cost prohibitive and inappropriate from an asset allocation perspective), but again, as a small piece it can make a lot of sense.

Anyway, didn't mean to detract from your overall points. It's hard to put a specific number on peoples' insurance needs without knowing their situation, but the spirit of your points was spot on. Especially about "own occupation" disability coverage - which I think is especially relevant for programmers.

TL;DR on insurance: Talk to a professional that you trust, figure out what amount of protection makes sense, and get protected. Term life insurance is an affordable way to get a lot of financial protection for your family. Your ability to earn an income is perhaps your greatest financial asset (edit: assuming you have many working years ahead of you), so treat it as such. Think about protecting it with disability income insurance.

I'm heartbroken every time I read one of these deeply personal stories. The situation is already stressful enough - one shouldn't have to worry about how the family will keep the lights on.

[Source: I once worked in financial services]

[300bps]

I'm in IT but I am also a CFA charter holder (Chartered Financial Analyst). I disagree wholeheartedly on your assertions on whole life. I have only seen whole life be an appropriate investment vehicle for very wealthy families that are doing estate planning. There may be other times where whole life is appropriate but I don't know what they are. In almost all circumstances someone would be better off buying term insurance and doing their own low-fee investing somewhere like Vanguard or Fidelity. They've made it so simple with Target Retirement funds.

[khafra]

> There may be other times where whole life is appropriate but I don't know what they are.

$80,000 for cryonic suspension, which is most likely to be successful if you die of a terminal illness; which is most likely to happen when you're old enough that term life insurance is ridiculously expensive (but could happen when you're young, which is why to go whole life instead of just investing and then paying up front for the suspension).

[300bps]

If term life insurance + self-invested funds nets more money than whole life insurance then it is better to buy term life insurance and self invest your funds.

The problem with whole life are the massive profit the company takes and the massive commission the salesperson takes. If:

A represents the value of a term life policy after costs

B represents the value of investing after costs

C represents value of a whole life policy after costs

In all circumstances I've evaluated but one, A+B comes out ahead of C. The only circumstance where C has a chance of coming out ahead from what I've seen is as part of an estate plan to minimize taxes.

[franl]

Based on your comment, I know you won't be swayed, so I won't argue :) My point was simply that allocating a small percentage of your money toward a WL policy can make some sense because it's such a flexible financial instrument (tax-deferred growth, tax-free withdrawals, policy payments made in the event of disability, a small but reasonable tax-adjusted return, permanent death benefit, etc.).

If/when I get married, my plan will look like this: majority of life insurance via term, modest WL policy, disability income insurance, some index funds, and some stock of two or three companies that I know deeply.

What happens to folks who retire after a crash like in 2000? It'd probably be better if they left their investments alone, and instead drew some money from their WL policy. You could argue that their allocation should've been well tilted from equities at that point, but what if it wasn't?

In a perfect world of automatic 10% yearly returns, and diligent saving/investment, buying term and investing the difference (from WL) would smack the performance of WL. Unfortunately it doesn't work like that. Most people don't save/invest diligently, and the market isn't automatic.

[gbhn]

Definitely unbundle your life insurance and investments. The only reason I can think of for coupling them is just shy of fraud.

-- someone who once got sold a whole life policy

[franl]

Out of curiosity, which insurance company was it? How long after getting the policy did you cancel it? What made you cancel?

[x0x0]

I'm the son of a parent who died well before I graduated high school. I hate to say it, but $500k isn't nearly enough unless you're in a very low cost of living state. Even if the surviving parent makes a good wage, you will have a surge of childcare expenses. And if the surviving parent wasn't the primary earner that's when you really need the insurance. The thing lots of people don't consider is that you may not die from a car accident where shit just happened. If someone should be unlucky enough to get cancer, you may face several years of illness with not only reduced income or disability pay but an astounding amount of money spent on medical treatment. Just for starters, insurance will not cover eg childcare for young children while parent #1 is sleeping at the hospital while parent #2 is recovering from surgery or chemo or radiation or whatever it may be.

From my experiences as the oldest of several kids, $1mm is really the minimum and it's worth a quick talk with an attorney to not only have (1) a will; (2) a written discussion ahead of time of what you want to have happen if you or your SO should ever be severely injured (see eg the Terri Schiavo debacle); (3) a discussion of who you would like to have raise your kids should both parents be injured; (4) tax avoidance strategies should someone die early.

These are all unpleasant things.

The other thing you may find shocking is how long it takes to get a death certificate issued / the challenges getting access to accounts held only in a single name. Maybe our experiences where unusual but you should not be surprised if it takes 3-6 months to get some of these things sorted. Not to mention the surviving family are usually an emotional wreck.

[skittles]

I think the better message is to think about what would happen if you or your spouse died or couldn't work. There isn't a one-size-fits-all plan. Someone with a $500,000 mortgage, $50,000 in other loans, and no real nest egg needs more than your recommendation. Someone with a spouse that makes a good income, has very little debt, and having a substantial nest egg may not need any life or disability insurance. The key is to be realistic with your situation.

[tungwaiyip]

Best wishes to Jonathan. I've chipped in my little bit.

Agree about the importance of getting term life. One thing to add, the Internet (or the society) is a life insurance! Help some one in need. One day the karma will come back to you.