I was talking with friends couple weeks ago about the life insurance coverage at their work.
It turned out that the company covers up to 100K,
which is quite generous considering IRS says any company is not going to be able to deduct for coverage over 50K.
http://www.irs.gov/Government-Entities/Federal,-State-&-Local-Governments/Group-Term-Life-Insurance
So, is 100K enough?
It is certainly enough for a burial (~15K, not counting land plot) and cremation (~2K).
It is certainly not enough for to cover the 30-year mortgage for someone who purchased a house in OC within the last 5 years; or have children who are over the age of 10 and are planning to go to college.
D.I.M.E is a quick way to calculate the coverage needed.
D - Debt. Car loan, Credit Card Debt, etc.
[usually not applicable for Asian Americans I know. Being very politically-incorrect here.]
I - Income. Annual income multiplies by 20 years.
(or 10 years if the main income earner is retiring within the next 10 years.)
M - Mortgage. How much is left to pay?
It turned out that the company covers up to 100K,
which is quite generous considering IRS says any company is not going to be able to deduct for coverage over 50K.
http://www.irs.gov/Government-Entities/Federal,-State-&-Local-Governments/Group-Term-Life-Insurance
So, is 100K enough?
It is certainly enough for a burial (~15K, not counting land plot) and cremation (~2K).
It is certainly not enough for to cover the 30-year mortgage for someone who purchased a house in OC within the last 5 years; or have children who are over the age of 10 and are planning to go to college.
D.I.M.E is a quick way to calculate the coverage needed.
D - Debt. Car loan, Credit Card Debt, etc.
[usually not applicable for Asian Americans I know. Being very politically-incorrect here.]
I - Income. Annual income multiplies by 20 years.
(or 10 years if the main income earner is retiring within the next 10 years.)
M - Mortgage. How much is left to pay?
E - Education. How much student loans one have left to be paid off.
and/or how much you are saving for your children to go to college?
(p.s. State College tuition has tripled in the last 6 years.)
Usually, for a full-time worker, this number is no less than 1 million, even without the mortgage.
5-year term life insurance should be relatively cheap to start until the age of 40. That is why AAA loves to advertise it. Then it become expensive so most people have a hard time replacing the coverage when the 20- or 30- year term are over, which is when the family may need the coverage the most.
Frankly, the coverage could be significantly less when one re-calculate for the coverage sum through the DIME at age 55 rather than at age 22. On the other hand, a family of age 22-ers recovers much more readily than a family with age 55 single-income provider.
Talk to me if this does not make sense.
Sincerely,
Mindy
2013 October
and/or how much you are saving for your children to go to college?
(p.s. State College tuition has tripled in the last 6 years.)
Usually, for a full-time worker, this number is no less than 1 million, even without the mortgage.
5-year term life insurance should be relatively cheap to start until the age of 40. That is why AAA loves to advertise it. Then it become expensive so most people have a hard time replacing the coverage when the 20- or 30- year term are over, which is when the family may need the coverage the most.
Frankly, the coverage could be significantly less when one re-calculate for the coverage sum through the DIME at age 55 rather than at age 22. On the other hand, a family of age 22-ers recovers much more readily than a family with age 55 single-income provider.
Talk to me if this does not make sense.
Sincerely,
Mindy
2013 October
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