Ask HN: Ideal life insurance/yearly salary ratio? | Hacker News Reader

Ask HN: Ideal life insurance/yearly salary ratio?

I am recently considering a life insurance, but I cannot decide how much sum I should go for.

I thought perhaps "ratio of insurance sum to yearly salary or average house price" might be a good metric to start, but I couldn't find much info on the internet besides from insurance marketers.

I'm aware that it depends on individual situation. My case is: living in Europe, single, 30s, no dependants, no health problems, no risk except travelling. I want my family/siblings to have some relief if I die sooner for any reason.

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Here in America we have something called “term” life insurance which pretty much is just limited to say, “if you die in 20 years”

I find that insurance a lot more reasonable because looking at it from a lifetime cost it makes a lot of sense.

For example for a $500,000 I $9,600 over the 20 years. That’s not bad for shifting the risks of premature death from me to somebody else. At the same time I’m working on saving so by the end of the 20 years I already have a similar amount that could be passed to them in case that something happens to me.

From my point of view, if you have no dependents, why are you concerned with life insurance?

Life insurance is better if you are married and/or have dependants, and your partner doesn't make as much as you, or they would be in a bad financial situation if you didn't. Example: having a mortgage with a partner that can't foot the payments alone.

Also take into account the social welfare net that your country has, some countries have pretty fair safety nets, where it makes paying for life insurance not a necessity, as you already pay them in your taxes as you know your family basic needs will be taken care of in case something bad happens.

In the US I'd find that important, but not so much in Germany, for example.

There are too many insurance or financial products to take your money; if you decide to pay for all of them, you'll lose the ability to save.

Furthermore, you might lose your ability to do an extra thing or two before you die. Better to make that vacation before your time is over.

I notice some people are overly concerned with when they die. After having lost one of my parents, and having seen other family members passing away, you'd be surprising on how people adapt.

On that topic, I saw family members completely change their personality and reach financial independence, because they had no choice to, and overall nowadays they are more mature than they would, if they could keep relying upon others all the time.

> considering life insurance ... single, no dependents

If you're dead, who needs money for what and for how long?

That's the consideration.

So get what you need for that, if you need it. And if you need it, in general more doesn't cost much more, up to a limit the insurance provider puts on you (often trying to limit you to on the order of 5x or 10x annual).

Good question, thank you.

> who needs money for what

I want my family/siblings to have some relief if I die sooner for any reason.

> for how long?

This is the part I don't know or can't decide yet.

How much money do you give your family/siblings every year?

How big will your estate be, should you die today?

That's a good question I need to ask myself. Thank you!

The only thing I consider is making sure my spouse can take care of our kids for at least a little while if I died early. I agree with everyone else saying that if you’re single don’t worry!

Your calculation would normally depend on how much support your dependents need, and that can be hard to work out. In this case I can't see how you can get an answer.

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