How Much Does He Need?

Dave recommends a certain life insurance length based on your situation.

QUESTION: Listener on Twitter asks what length of term life insurance he should get at 36 years old.

ANSWER: You want 15 to 20 years. There are a few instances, not at your age, where someone has a big family and they just started having kids and might look at a 30-year policy, but most people don’t need that. You probably just need a 15-year.

If you are 36 years old, I’m guessing maybe you have an 8-year-old kid and a 6-year-old kid. In 20 years they'll be 28 and 26. In 15 years they'll be 23 and 21. They'll be grown and gone in 15 years. In your case, a 15-year fixed will probably work.

I would go to Zander Insurance and look at the 15-year and 20-year policies and look at the difference in cost per month and I'd probably go with the 15-year. That depends on the age of your kids. The question is where are you going to be at the end of that term.

Are you going to have your house paid off 15 years from now? I sure hope you didn't take out more than a 15-year mortgage. Are your kids going to be grown and gone by then? Are you going to have a pile of money in the bank by then?

If 15 years from today you have $700,000 in your retirement account, a paid-off house and the kids are grown and gone, and you die, your husband or wife is all right. But if 15 years from now, you still have teenagers at home and the house isn't paid off yet, then you probably need a 20-year. That's how you look at it–how much longer are you going to need insurance?