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Life insurance policy questions?

I'm 35, I have two daughters (age 10 and 5 months) plus two step sons and a fiance. I'm at a point in my life where I want to purchase life insurance to take care of my kids. I work for the government and won't be legally able to retire for another 17 years. I only have one policy (paid for by my work) for 48K and this is not enough. I want to take out a policy for 1,000,000. Should I go with the 10 year term life insurance and re-enroll when I am 45? What are the chances that the lock in rates will go up or down based on historical evidence? If you were in my shoes what would you do? I've already considered whole life but honestly I can't afford the premiums on whole life for this sort of policy (although I haven't looked) and I'd rather invest the difference in IRA's for the next X amount of years. I'm considering either the 10, 30 or 35 year term. What do you think? Thanks for all replies!! I was thinking of taking out a 1-2 mil policy now for a 10 year term and decrease the amount as I get older and my kids get older. I figure when it's time to renew I can take out a smaller policy every so many years until the kids are old enough to take care of themselves and then when I am real old I will only need enough just to cover my funeral expenses and a little something for the kids/grandkids. DOes that help? I don't know if I am misconceived about the notion that if I go with a longer term and say I died just after the insurance took effect, my kids would get the amount of the insurance policy minus the premiums owed for that many years (say 35 year term life) - is this correct or am I overanalyzing?

Public Comments

1. Well, how long will you need that amount of insurance? If you will still need it in more than 10 years, you need to take a longer term. The premiums are only going to keep increasing with age. If you will need less after 10 years, go with that and downgrade in 10 years.
2. A longer term will reduce the amount of premium that you need to pay now. But at the same time you are paying the amount year after year. but unfortunately you have not much options. since the value of the money you pays now get decreased and you won't feel much burden after some years as you feel it now. So go for a long term. but you have to find yourself the year in which to apply the brakes.
3. I know you don't want to hear it, but I'd go with Whole Life. If you can't afford the Premiums on $1million dollars, get a lower amount. It's worth it, because after your term insurance expires, you're in a bad situation: you could extend the term without a medical exam to see if your healthy (huuuuuge rate increase), or apply for another Term Policy. 15 or 30 or however many years down the road, you can't be sure if you're going to be healthy enough for a new policy. If you're not healthy enough for the insurance company to take your risk, you'll have to extend the length of your term policy which will cost way too much right around the time of your retirement. Plus, whole life policies pay you dividends when your insurance company makes money. Build your cash value well and you could turn a $750,000 policy into something much more. *******EDIT: there are Riders that you can attach to a whole life policy that decrease the death benefit as you get older. I suggest going to a broker. It's well worth it, because you don't want to get stuck in a policy that's not the best option for you.
4. You've got a five month old child, and you already know that ten years isn't long enough. Buy a 20 or 30 year term policy, and make sure it has a guaranteed renewable and convertable option on it. Rates won't go down significantly, at least, not as fast as you'll age. Pay for your funeral, with savings, not insurance.
5. Go with a longer term, there are 20 year terms if that would be a better option for you than 30 or longer. You should be able to get a $1 million 20 year term for well under $100/month if you're not unhealthy. You're a little misinformed about term insurance. If you die, the company does not deduct future premiums from your death benefit. You may want to consider buying a combination of whole/universal and term. Maybe a $100k whole/universal policy and a $900k term policy. This way, you already have the insurance locked in for when you're elderly and just want a small amount, plus you'll have the chance to build cash values. You also have a large value term policy to take care of your temporary need of having a lot of insurance while your children are still young. You never know what might happen. 10 years from now, you may not be able to qualify for insurance. Buy what you can while you can.
6. I think your strategy is sound. I would probably go with 20 year term to lock in the rate until your youngest is an adult. You won't be able to count on the rates in 10 years being affordable. If you keep the current policy the rates will increase drastically in 10 years. You would be banking on the fact that you would still be healthy enough to qualify for a new policy in 10 years and if you could guarantee that you wouldn't need life insurance in the first place.