This is single best financial optimization most geeks of my acquaintance have not done yet.
"I think I have life insurance through work?"
Get private insurance anyhow. A lot of the black swans that can hit young, healthy people will make you uninsurable in later years of the policy you could get now and/or will make you want to quit to spend limited time w/ family.
Get private insurance anyhow. A lot of the black swans that can hit young, healthy people will make you uninsurable in later years of the policy you could get now and/or will make you want to quit to spend limited time w/ family.
"I have like a million dollars of it, thanks."
The marginal cost of the second and third million dollars are very small next to your monthly income, you're presently underinsured relative to your earning power, and your heirs will not regret the extra money in event they need it
The marginal cost of the second and third million dollars are very small next to your monthly income, you're presently underinsured relative to your earning power, and your heirs will not regret the extra money in event they need it
Also make sure to either layer on a new policy or get new policy for X+Y then cancel existing one when your circumstances change as a result of (most prominently for geeks of my acquaintance) marriage, childbirth, or major changes in obligations.
"Major changes in obligations?"
Examples might include "I see line of sight to being responsible for my parents' upkeep in their retirement years" or "I have been awarded options which would have a material exercise cost."
Examples might include "I see line of sight to being responsible for my parents' upkeep in their retirement years" or "I have been awarded options which would have a material exercise cost."
n.b. You can totally say, in a conversation with an underwriter:
You: I want $X million in coverage.
Underwriter: Per guidelines, based on your income, we think $Y should be sufficient.
You: I work in tech and feel I have a likelihood of eventually having options exercise cost.
You: I want $X million in coverage.
Underwriter: Per guidelines, based on your income, we think $Y should be sufficient.
You: I work in tech and feel I have a likelihood of eventually having options exercise cost.
(That and "I run a closely held business" are close to magic words for getting coverage approved assuming your core risk(s) are underwritable.)
"Why do underwriters care how much coverage I have relative to my income?"
They're worried about adverse selection. Purpose of term life is protecting future earnings; saying "I want way more than future earnings" suggests either a) you know more than them re: your health or b)
They're worried about adverse selection. Purpose of term life is protecting future earnings; saying "I want way more than future earnings" suggests either a) you know more than them re: your health or b)
Well, b is that you or potentially someone else has plans that your insurer should not encourage.
If you have specific cash needs which aren't naturally reflected in your future earnings, though, underwriters are very willing to accommodate those, particularly if documented.
If you have specific cash needs which aren't naturally reflected in your future earnings, though, underwriters are very willing to accommodate those, particularly if documented.
n.b. Feel free to Dangerous Professional your way through "documented":
"Here's proof of employment by a tech company."
"And can I see the options paperwork."
"That's private."
"Here's proof of employment by a tech company."
"And can I see the options paperwork."
"That's private."
