What Term Level Should I Buy?

Valerie has two kids and will have the house paid for soon. How does she determine the proper length of the term life insurance policy that she wants to get?

QUESTION: Valerie has two kids and will have the house paid for soon. How does she determine the proper length of the term life insurance policy that she wants to get?

ANSWER: Twenty years from now, you’ll have a 24-year old and a 26-year old. Hypothetically, they’ll be grown and gone. Twenty years from now, if you’ve been out of debt, your home will be paid off. You’ll have been saving 15% of your income for 20 years. In that 20 years alone, you’d have well over $500,000 for retirement on average. If either one of you died in that situation, the surviving spouse would be fine. At that point, you would be self-insured. If you’re following the Dave Ramsey plan, a 20-year term would be all right. But if you plan to have four more children after this, you’d probably want a 30-year plan.