Lot to digest but I feel you deserve some insight:

1) Life insurance is income tax free. As opposed to what most finaicial planners tell you – it is 90% of the time included in your estate for estate tax purposes (there are advanced ways to get it out of your estate). So, if you had assets totalling $500,000 and you had a $1,000,000 policy. You would pay 0 in federal estate tax (because you can leave up to $3.5 Mil to a non-spousal US bene) but you might hit a State Estate Tax if you live in one of 18 states which are decoupled.

2) Second your end number is $1.67mil or something doesn’t into account future growth of that money. If you are trying to get how much you need that way (e.g. Income Replacement) you need to do the present value of that number given a specific growth rate (I would use something really low because the kid is going to have to be conservtive so like a 2.5% NET to 3.5% NET).

3) In terms of the mortgage you should build an excel spread sheet seeing how much that takes off your husband’s need.

4) As you can tell from the above comments and my guest post on this blog – I like whole life insurance because you know why – 99% of us (including myself) do not buy term and invest difference! How much cash do you have built up in the WL? If it was int he last 2 or 3 years the number is 0, but if its 10 years deep you’ll be suprised how much cash is there, you can then do a lump sum 1 time pay off of UL or diff type of term.

JUST SOME THOUGHTS!

Our son needs 21 years of “income replacement”. I make $78,000 a year (pre-tax) so I would need $1,638,000 in life insurance!? That seems like an awful lot… If I calculate it post tax then it’s still about 1.2 million which still seems like a lot…but maybe I’m just being naive about the whole situation…

Also, providing that if I were to die, my husband could take a lump sum of cash and pay off our 30 year mortgage we would save an INCREDIBLE amount on interest…so doesn’t that reduce the amount of life insurance we need? For instance our $235,000 mortgage comes out to about $1,600 a month of which a whopping $1,100 goes to interest right now. I know that as time goes on less and less of our payment will go towards interest…but still this mortgage interest factor must affect the calculation some how?

Currently I have 600K worth of coverage. 100K through work and a 500K whole life policy (don’t get me started on that…I feel really ripped off by the financial planner who sold it to me…but I digress). I feel like I need a little more coverage but not DOUBLE…what do you think?

I’ve never seen such a crazy statement.

WOAH 2 packs a day? Considering we are talking about stuff over the comment section I can’t tell if you are being sarcastic or not. But if you are serious you can’t possibly be bitching about the cost of life insurance.

Considering I like Patrick and his readers lol I decided to run a quote for you:
Lets say you are 45 and pay 300 a month for 30 Year Term – note that 300 is LESS than the amount of 2 packs a day ($5/pack X 30 – in NY a pack is over $7). This amount will buy you OVER $320,000 GUARANTEED.

I work for a AAA Rated (one of the few left) company that has been around about 150 or so years lol. Which means you CAN even get cheaper term somewhere else.

While this may not be appropriate but I think of term insurance as the bottom of a pyramid. Do you really need to be dropping in 500 a month into a Roth IRA (not saying you do – just making a point) if your family can’t survive past your demise?

Not sure if you do…but stop smoking! With the increase in the federal tax on smoking going from 39 cents to over a buck, now is as good as ever.