I always understood life insurance to be something like income replacement if the primary breadwinner of the family dies, and there are people that need financial support.

Up until this summer, my wife and I both earned more than enough to cover the monthly bills while investing for retirement and all that good stuff. She recently got a pay cut cause her company is garbage, but the benefits and working from home are worth it. Her salary would not be enough to cover monthly expenses alone, but mine would be.

Not sure what details are needed for this equation, but I'll put some out there:

I'm 40, non-smoker, decent health and losing weight/lifting. No real family history of stuff to start before ~65
She's 41, some weird autoimmune disorders and more significant family history. Had thyroid cancer a decade ago and now UC but otherwise OK. So we use her work's insurance which isn't cheap but not terrible.

Two sons, going on 5 and 8.
We own our cars and no real consumer debt. 6+ months of emergency expenses, kids have college funds, 200k equity in the house we own and retirement would be on track to hit 7 figures in a few years (historical returns) even if we don't contribute any more to it, and we're maxing the last few years.
Each have a small amount of Life Insurance covered through our jobs, I think between 25-50k.
All our parents are alive at ~70-74 years old. Hers have land but no real war chest, my parents have a decent retirement but historically live to 100. We're planning on nothing from either side to be on the safe side.

At the risk of being morose, if she were to pass I would be "fine" financially. Would be able to cover expenses and still contribute to retirement. If I kicked the bucket, she would not be able to afford to cover monthly expenses without stopping retirement contributions and cutting the budget pretty significantly. I think it could be done but would be uncomfortably tight.

with that said, is life insurance something I should consider? And if so, what kind of policy and numbers should I be looking at? Any other estate planning type stuff I should be considering?

It's dark to think like this but as I hit 40, all visions of me being a super healthy construction working 22 year old have left me realizing that is no longer the case, and I'm on the bad side of the bell curve

You have kids?

Yes you need it. Get it now while you’re young and healthy. Mo cheaper.

Does your employer offer life ins, and if so, can you get a multiplier of your salary?  Something like a basic 250k policy, with a multiplier of 3 times your salary, as a rider?  I think my basic was 150k and I got a multiplier of 3 or 4, with a limit of 4.  Just a thought.

ETA:  as others have said, you have kids and a wife.  Get it.  I’d get it on my wife as well.

You should get term insurance for both of you, since you both bring income and are contributing to your retirement accounts.

You should reevaluate every several years as your wealth increases.

Theoretically, when you retire and all of your income is from non-working sources you should be able to cancel your life insurance policies.

I would absolutely have insurance if I was in your position.

I have enough my wife won't have to work when I die. She's been home for the last 11 years and that could continue.

She has enough to cover child care expenses in case she dies. Quite a bit less than I have, but enough we could manage and minimize lifestyle changes.

Needed? Yes

Type: 15 or 20yr term

Amount: ideally something in the neighborhood of your take-home pay divided by 5%

What you’re trying to do: Provide sufficient income replacement that your family can maintain their standard of living in your absence.

For example, if your take-home is $50k and you want that replaced for 20 years (when you’d have reached 60) that’d be 50,000/.05 = $1MM

Scenario: You kick the bucket tomorrow, your family gets $1MM, it gets invested wisely, and they draw $50k/yr with inflation adjustments for 20 years with some margin of safety.

Term insurance! Absolutely.

In your situation, $1m or $2m policy.

That’s enough to pay off your house, put kids through college while taking care of wives operating expenses for quite a few years.

At 40, it’s  probably $500-$800 annually for a policy. Worth every penny.

Zanderinsurance.com

Sounds like you could use some life insurance.  Not every one does, though.

Yes, in your case I would get at least 10 year term policy, but probably 15 or 20.  The amount would be based on my expected income replacement.

+10

Term insurance,  10x your annual salary.  

Its cheap when you're young as you, get that rate locked in.

It's not just loss of income you have to consider but also increase in responsibility.

I presume you guys split the load with respect to taking care of the kids and other family business.  If one of you dies, now that's all on one person.  That one person, you or your wife, not only has to work, but has to carry the entire load of carrying kids.  IMHO, that's two full time jobs so proper life insurance has the potential to take at least one of those jobs off the table.

In the event of one person dying, I'd want to be in a situation where full time employment was entirely optional for the other at least until the kids are out of school.

Yes, as long as you have a solid loving relationship with the wife and kids. If not and you are worth more dead than alive enjoy the dropped banana peels, cut brake lines, and morning coffee with a little something extra added to it.

If you have to ask the answer is yes. I signed up for enough to pay off the house and a year of salary. I’ll probably never need it. It’s something I afford by not buying other things, and it makes me feel like a responsible adult.

Yes!

Kids and wife. We did 7x our salary, about the same amount as a local house plus $100,000. It was twice our total debt at the time so if one died the house was paid and the survivor would have another $250,000 for expenses.

Hope that helps.

Dave Ramsey recommends using your employers Life and having an independent one you pay out of pocket, in case you move jobs or lose jobs then you have your personal policy--which you got when young and so avoided later in life pre existing conditions.

This is what I do.  I don't have as much coverage as if I just used my employer, but I have redundancy and as I age things get more expensive.

There's a book on the origins of life insurance titled "Parish Priest", the pastor wanted to do something for all the families that lost their single wage earner and went to the poor house, so he worked through the local Knights of Columbus to basically start life insurance.  Short but interesting read.

At least have enough to pay for a funeral.

My employer benefit term life was guaranteed and started out as a good rate but after turning 40 the premium would double every five years. I was caught by surprised by the first increase but had plenty of time to shop for a replacement before the next kicked in.  Now I'm locked in at an OK but not awesome compared to switching when I was closer to 40.

Answer the following question: if I die would there be people that I love that would suffer financially? if the answer is yes, then you need life insurance.

My wife thought we were going overboard when I doubled my life insurance, but I made about double her salary, we had kids, so I did it anyhow.

About a year later I damn near cashed it in.  No more talks about “too much” life insurance….

If you do get a policy through work, and you decide to change jobs, don't assume you'll just convert that group policy into an individual policy.

I just switched jobs.  I had $1M for about $900/year.  Want to guess what converting that to an individual policy was going to cost?  $78,000/year.  

I already have a separate individual policy so it wasn't an issue ... but I was still like .... WTF? ..... 78 thousand dollars?

Good point.  I have a group policy through work that my employer provides at no charge for my annual salary.  I can buy up to five times that amount if I pay the premium.  The premium for each year's buy-up is the same as the premium for my private $2 million policy.