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May 20, 2010

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"Rules" such as this would be vastly more helpful if they didn't assume a family structure that is at present almost obsolete...

Most families these days rely on *two* adult wage-earners. Are you supposed to split the insurance recommended between the 2 adults? Do you use the higher or lower wage in your calculation?

Also more and more families with young children these days are split between 2 households because the parents are divorced. If one parent dies, he or she needs to cover what they would have paid in child support up until age 18 and possibly college costs plus some "extra", but unless you've remarried, you certainly don't need to cover your mortgage and household costs or the costs of maintaining a lifestyle for a non-working spouse.

Your right MC. I don't have any kids. And I have no debt. If I died my parets would get most everything. I don't need life insurance. I think my employer gives one year of pay to my benificiary also.

I disagree with the life insurance ratio -- as life insurance should not be based on your salary. That is not the purpose of life insurance.

The purpose of life insurance, is to make sure any dependents you have will be taken care of. How much you need, is extremely situation dependent.

Even if you have dependents, if you already have a large nestegg, there is no need for life insurance, no matter how old you are or what your salary is.

I don't need any life insurance because I don't have any dependents and have a positive net worth. For anyone is single, I'd only recommend enough to cover your debts and funeral costs.

With dependents, I'd recommend enough to cover paying off your house (or enough to pay for a house in cash) plus X amount. X is whatever you feel would be enough to leave behind to cover expenses for awhile. Maybe that is 5 years, 10 years, 20 years??? Who knows, it will depend a lot of your current financial situation, your dependents and how old they are.

Count me as another who isn't terribly impressed with the life insurance ratio.

I have no family that depends on me. (wife or kids) If I die, my estate could pay my mortgage payments for about a year and a half with cash I have in the bank (if it had trouble selling the home, which is what it should do instead) My heirs (at this point, my parents, step-parents, and siblings) would have no trouble paying my funeral expenses. My folks could easily cover my funeral out-of-pocket if they couldn't get their hands on my money quickly enough for whatever reason.

I've got a 401(k) and IRAs, cash on hand, company stock, and equity in my house, all of which will go to my heirs. Why would I need life insurance?

That said, my employer provides twice my salary as life insurance, so assuming I die while still working this job, I'll leave my family quite a bit.

I am insured for about 2.77 times my annual income which is 3.23 times our annual expenses, but that's because my husband is also insured and we can technically live off either of our salaries (we can live comfortably off of his and uncomfortably off of mine...that's why we use mine for savings pretty much). Plus, we don't have kids.

We don't have long-term care insurance. I was hoping to wait til our 40's or 50's to look into that.

I have $15k in life insurance, of which $5k is provided by my employer. That will pay for my burial and leave a little over for my grown kids.

They are to bury me as I did my husband (I have this in writing for them) or cremate me. I do not want to be cremated, but I actually abhor the idea of being buried in a vault. God made the perfect recycling system for everything, including his children. Way to go, Father.

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