Life Insurance – One Policy Vs Laddering

Hi all,

I'm 41 years old, my wife is 32 and we have a soon to be 7 year old. I'm trying to determine what's the best strategy for a term life policy. Short backstory to frame this question – We have 1.4 million left on a mortgage at 4.75%, we bought last June. We are both self employed. I currently make about 60-80k a year and my wife clocks in around 500-600k a year. We expect for her income to drop off the next 10 years or so given her business model but we expect the next 5 to be in this range. who really knows though…so it's difficult to project how much our income will be in the future. We currently have about 200k in investments with 200k in cash to cover taxes for this year and investment contributions for 2022 ( i know this is dumb but we've been so busy with running our businesses/life this past year we have not been on top of money management )

I'm currently deciding on the amount and structure of our life insurance policies. My preference is that our kid not be a latchkey and that the surviving partner can work part time and spend time as an actual parent. My plan was to reduce costs by laddering two policies with roughly a 60/40 benefit split on a 30 year and 20 year policy with the thought process that the mortgage will be paid down so why pay the costs to over insure. A 30 and 20 term would also roughly coincide with two life events. College and the mortgage term. Given that I really can't project with any type of certainty, income and investment levels 20 and 30 years from now and factoring inflation.

All that being said with our circumstances I don't really really know how much I should be insuring ourselves for on these policies other than at minimum 1.4 million on the 20 year term to cover the mortgage. Additionally I'd like her to have some help with childcare and life expense costs so maybe 1.75 million on the 20 year to make sure she has a cushion and the 30 year term around 1 million to cover the 700k left on the mortgage + life expenses.

Am I over complicating this and should I just get one policy ? The broker also mentioned that laddering 3 policies that progressively fall off is an option also.

Thanks for the input, incredibly appreciate of this sub. It's been incredibly valuable to me and my family

submitted by /u/Mutt382
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