I'll take life insurance for $1,000,000 Alex.
August 28, 2020 11:14 AM   Subscribe

I'm 44 and shopping for life insurance. I have questions about how much coverage I need, the quoted price I got, and whether my psychiatrist really managed to double my premium quote.

I have an existing 20 year $350k policy that expires in 2023. At the time I got the policy I was married with no kids making about $55K.

Now I am 44, two kids (age 10 and 7) and I'm looking to get new coverage with a new 20 year term. I'm going thru Policy Genius and was quoted for $1.25 million in coverage. I was quoted $75 per month before my medical screening. With the medical screen done, that quote ballooned to $160 based apparently on confidential information from my psychiatrist.

I have a long standing diagnosis of depression and a more recent-ish diagnosis of anxiety. I feel that both are well controlled with medication. I have not gotten the impression from my psych that I was in need of closer management or that my functioning was impaired. But what the hell did she say and could that really have doubled it?

So questions are: do I need $1.25 million in coverage (I make close to $100K per year and i anticipate maybe getting up to 175K by the time I retire)? Is $160 a month reasonable for a premium for this amount of coverage? Did my psychiatrist manage to screw me over?
posted by tafetta, darling! to Work & Money (7 answers total) 1 user marked this as a favorite
 
I know that simply having a diagnosis of depression will make you a higher risk in the eyes of an insurance company. I doubt the doctor gave them any more info then the diagnosis.
posted by tman99 at 11:42 AM on August 28, 2020 [4 favorites]


This might be one situation where a broker is worth using. Different companies price the risk differently, and you may get significantly different premiums depending on which insurer is underwriting the policy. A good broker will know a bit about that price differentiation--and know who to place the policy with.

$1.25 million in coverage sounds appropriate for your current income--as your income increases you are (hopefully) building wealth so you can self-insure to some extent.
posted by dpaul at 11:55 AM on August 28, 2020 [1 favorite]


Best answer: Agree with dpaul. Go through one or more brokers. Most brokers do not charge you a fee. They get a commission from the company you insure with. They get no commission if you don't insure so they are motivated to find you a good deal. They should know the quirks of various insurance companies and how they differently evaluate risks.

As for whether you really need insurance, that's a complicated question. Most important is what happens if your family loses your income. Does your spouse have their own job and career? Do you have a mortgage? How much do you have in savings?

You might see if a 15 year term improves your pricing. By that time your kids should be out of college.
posted by JackFlash at 12:16 PM on August 28, 2020


Are you sure that was the cause? Did they do the medical exam?
posted by slidell at 12:32 PM on August 28, 2020


Your psychiatrist did not screw you over. She probably just submitted her working diagnoses, and/or records if you signed a release for them. Life insurance companies are massive assholes when it comes to anything to do with mental health. Be annoyed at them, not your doctor.
posted by namemeansgazelle at 1:39 PM on August 28, 2020 [3 favorites]


If you died, what would your family need to get through to place where they could support themselves?

First, what is your take home pay, adjusting for expenses that disappear if you are gone, adding for those that are needed to cover your absence.

Second, take a look at what they could get from social security based on your earnings. I have a friend who was widowed young with three small children and no career. Social security provided income for the children and for her as their caregiver plus access to Medicare. That all made a huge difference in how much she needed to make ends meet. She also decided to move closer to family (in a lower cost state) since she didn't need to be near her dead husband's employer any more. Finally, when came to college costs, the kids of that same widow were able to qualify for excellent financial aid since they were both good students and had a very, very low household income. This doesn't meant that you don't need insurance at all - just that you don't need insurance to cover 100% of your salary. At the same time, you don't want to over insure - odds are that you won't use the policy so you don't want to waste money
posted by metahawk at 3:57 PM on August 28, 2020 [1 favorite]


When I secured life insurance last year, I talked to four different companies and the initial quote went up at all four after reviewing my medical history, which doesn't contain any huge red flags. One of the four only went up slightly and so I went with them. Definitely worth it to shop around.
posted by benbenson at 9:28 AM on August 29, 2020


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