The Sale

[James]

I know some that live on one income, some that do it for well under 50 grand, yet this is E. TN, I doubt you could do it as comfortably in MD or CA. Yet most double income families do it out of need, a need for a lifestyle or the effects of not being able to gain gainful employment that pays above average. Either reason usually ends up with excess money to one degree or another, its how that excess money is used that will determine the household future economic status.

 

[James]

Yet I do think since women have entered the workforce in great numbers since the late 60's that it has driven down pay. If you have two workers per household instead of one obviously that'll have effect on what employers will pay.

 

[Winter_123]

It can be done:

Monthly bills - sample

Mortgage: $2,000
Car payment: None - own your car
Food: $200
Utilities: $150
Gas (car) $200
Cable/Phone: $100
Car insurance: $150
Credit cards: Zero - don't charge anything
Kids: $200 (school crap, clothes, etc...)

Total: $3,000 per month.

Now, this would be the most basic of bills. But if you have a place to live, food, a car and utilities/phone then anything else is added on. You'd need to take home $36,000 to break even and at 25% for taxes that's around $47,000.

That means if you have one bread winner making $60,000 - $80,000 or more in theory you're rolling around in money with one income. Obviously if you're making less than I'd say $50K you really can't swing it too well on one income.

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Yes it is still possible for a family to get by on one income as illustrated in the above example. However, since this thread revolves around the need or alleged lack of need for life insurance it is good to know in advance which one of the spouses will die, the one with the income or the other. That will help to know whether life insurance is still needed even though one could theoretically get by on one income.

Winter

 

[Crabcake Johnny]

Well....in my case income would have to be replaced. I'm the bread winner and my wife hasn't worked in 8 years. She also just has a high school degree and when she did work she was a Hooters waitress and admin assistant. I don't think she's going back to Hooters if I die:-) And admin ass't jobs pay around $8 to $12 a hour. So in our situation if I didn't have the proper DB my wife and son would end up back at her parents house. No deal.

 

[djs]

============================================
Yes it is still possible for a family to get by on one income as illustrated in the above example. However, since this thread revolves around the need or alleged lack of need for life insurance it is good to know in advance which one of the spouses will die, the one with the income or the other. That will help to know whether life insurance is still needed even though one could theoretically get by on one income.

Winter

I don't understand, why does it matter who is going to die first? That's not what life insurance is about. There are several reasons why people buy life insurance, such as leaving an estate, making sure the kids get an inheritance, etc, etc, but the primary reason is income replacement. If someone makes money dies, the family still needs that income. I can sell all day long on this statement, it's the need that people are passionate about.

Simply put, if you are selling life insurance to replace income, then you put enough on the person to replace their income. If they make $100000 a year, than, in rough numbers you need to put a $1M policy on them so they can invest and still have $100K a year for the family (this is not an exact science). If they make $10K a year, they need a $100K policy. Because of this, you insure any of the breadwinners as they need to be insured so the family is taken care of. You don't want the kids to have to move out of the neighborhood, or quit soccer or karate, because the money that paid the mortgage/rent or the payments on the karate classes has gone away.

With young children, even if mom is a stay at home mom (or dad is a stay at home dad), and doesn't work, there is a need to protect the breadwinners income, in the event mom isn't around anymore. Dad will have to pick up a considerable expense for a long time to replace some of what mom was doing.

Now, this is only if you are looking at death insurance (aka term insurance). If you are looking at life insurance (aka permanent insurance), than there is a lot of other factors to consider. I sell term insurance strictly as income replacement, since it's easy to see that when you retire you don't need it anymore (no more income). I sell permanant insurance as a hedge for living through your retirement years, but still covering your family if something happens in the early years.

Buying life insurance isn't about knowing your going to die, it's about protecting your family in the event you didn't know you were going to die, and did.

Dan

 

[Crabcake Johnny]

If my wife goes I just need enough of a DB so I can hire a Swedish nanny.

 

[James]

============================================
Yes it is still possible for a family to get by on one income as illustrated in the above example. However, since this thread revolves around the need or alleged lack of need for life insurance it is good to know in advance which one of the spouses will die, the one with the income or the other. That will help to know whether life insurance is still needed even though one could theoretically get by on one income.

Winter

No sir this thread isn't about the alleged lack of insurance, its about the proper amount and obvious decline in the DB amount as time marches forward for the most part. I don't know why you keep wanting to mischaraterize what I said. I assume since you have a problem with laying out what your are trying to espouse you can only fall back on the normal response of misquoting what I'm saying?

I was referring to a double income household, my normal prospect and I work deligently for that to be so. Now depending upon the income of both and their desire to work or not to work after the death of their spouse will determine a lot on the way I and I assume anyone actually selling insurance. Now with my example family of four, two kids around 8 and 10 we know if one spouse died and they were actively working for the require amount of Quarters according to SS Dept., the surviving spouse will recieve about 7-8 hundred a piece. Now we have to look at what kind of Insurance is in place on the job, many cases that can easily be two times the yearly salary, I find about 100-150 grand about normal, so right there we have enough to likely pay off the house or be real close depending upon their ability to budget and plan and what kind of Debt we are looking at. Now if my wife were to die I would recieve around two grand a month accounting for SS and her Retirement Plan as a survivor and my son and I would draw mine for life and my child's till he is 18 or 24.

Now we can look at retirement money, how much is there and if one spouse were to die would the other need that retirement fund to fund their's, this I find in many cases simply not needed or it can be used in whole or partial to provide money today, once again depending. I for one wouldn't need any of my wife's retirement money for myself to retire nicely, I just wouldn't need it at all. That would give me a pretty good amount to structure and pay for my child's college fund but wait, that is about taken care of already or will be when he reaches that age. If I were to die my wife would not be in any financial problems, in fact like myself she would do quite nice with very little DB on me. Now if things go as plan or partially as plan the need for a DB on either of us will shrink to next to nothing by the time I'm 55. This house will be paid off as my others and my son's College fund should be totally funded. Now am I the only one? I don't think so, I find people in much better shape then I and I find some in not so good of shape. Yet though, the need of a DB shrinks in time the only great secret is figuring out exactly what kind of DB is needed in ten, twenty and thirty years.

Now for the DB into retirement, I agree and never stated that there wasn't a need as you so seem to want to indicate that I have. I stated that amount is in most part a small amount. I find on average 100-250 grand max's out most unless they have some strong desire to leave a legacy to a Church, College or a Charity. Now when I sit down with the average client I propose first off is covering today's need, I can do that with ART or the 5-10 year term nicely. Since this amount is basically dirt cheap it isn't hard to sell that 100-250 grand (or convert in the years to come) from the term policy as in Convertable and Renewable. Plus you also have to give weight to the Conversion, I mean you can sell Banner and they offer Conversion, but the big question is Conversion to what? That is where Mass Mutual, Mutual Trust, Guardian etc etc comes into play, you should or I think that if you offer a term that is convertable you have to go with companies with the best WL Policies and lets face it, Genworth, Banner even AIG don't have the best WL Contracts out there, not by a long shot. While I like these companies I wouldn't sell their WL products.

 

[Crabcake Johnny]

I don't like any insurance to be more than it has to be. I don't have copays on my medical and have a high deductible. I have the highest deductible possible on my car with the lowest limits of coverage. I drive safe - if someone hits me it's on them, not me.

Same with life - keep it simple. I die my wife gets a check. Period. I need it while my son's growing up and I have a mortgage. I need far less of it after my house is paid off and my son's out of college.

Estate preservation and inheritence are all very legitimate reasons for perm life......as long as the correct DB is there if I croak tomorrow. That's hard to accomplish.

My personal strategy? I'm a dice-roller. I just got a new 30 year term policy last year - takes me to 69. House is paid, son's far out of college.

When my parents pass on if I get more than $100 I'll be pissed. They should be "spending down" their money and having fun. Go to Hawaii 4 times a year. They earned it - not me. I've never seen more good familes torn apart then when the parent die and it's inheritance time. I personally know three families it's destroyed. In each case the siblings no longer speak to each other. Die broke.

 

[James]

I don't like any insurance to be more than it has to be. I don't have copays on my medical and have a high deductible. I have the highest deductible possible on my car with the lowest limits of coverage. I drive safe - if someone hits me it's on them, not me.

Same with life - keep it simple. I die my wife gets a check. Period. I need it while my son's growing up and I have a mortgage. I need far less of it after my house is paid off and my son's out of college.

Estate preservation and inheritence are all very legitimate reasons for perm life......as long as the correct DB is there if I croak tomorrow. That's hard to accomplish.

My personal strategy? I'm a dice-roller. I just got a new 30 year term policy last year - takes me to 69. House is paid, son's far out of college.

When my parents pass on if I get more than $100 I'll be pissed. They should be "spending down" their money and having fun. Go to Hawaii 4 times a year. They earned it - not me. I've never seen more good familes torn apart then when the parent die and it's inheritance time. I personally know three families it's destroyed. In each case the siblings no longer speak to each other. Die broke.

Life Insurance is a personal matter, some like it others don't and its in all kind of degrees! Anyone that tells me they are pushing with on formula such as the 20x factor in Income Replacement isn't doing much Fiduciary Responsiblity or at least that is my opinion.

I've been in households where I found the agent before (whenever that was) sold on Income Replacement, 10-20 factor. They ask, "so how much to you make a year? Oh you need XX amount of insurance" and that is it! Now I start asking questions and find out the prospect owns two businesses (even though his take home was fairly low), now how much money do you think the other agent left on the table, and if the prospect brought the client knew the other agent was not very good. Now most business people don't act like Insurance Agents, they pay themselves a salary and the other money stays in the business or is taken out yearly as a Profit or Reinvested in the business. If you don't ask the right questions you'll never get the right answers!

 

[Crabcake Johnny]

Very true and the correct DB is at best an arbitrary figure. How much DOES my wife need if I died tomorrow? Well, my wife would need $40,000 after taxes to get the bills paid. I'm figuring on 6% invested with a 1 mill DB or $60,000 a year pre-tax income. Then she has social security bene's coming.

But it's arbitrary. Three life insurance agents would probably recommend three diffent plans and figures. All would be right - all would be wrong. It's too subjective.

I do know this though - a low DB would greatly harm my wife. Say someone came over and sold me $100,000 of perm and left. I die tomorrow and my wife's ass-out. That's useless. I really don't care what the structure is, what plan is sold, perm VS term....to me it all doesn't matter. The CORE function is life insurance is that it needs to perform is the insured died tomorrow.