Ideal Life Insurance Coverage Amount

[crew]

What are your thoughts on the amount of coverage (I am assuming Term is the way to go in this forum based on what I have read so far) is ideal? In US forums, many suggest 10x annual salary, but to get something similar in Japan seems prohibitively expensive. What would be a better rule of thumb for Japan? 3x net salary?

Also, another factor are the insurance taken out with housing loans that would take care of the mortgage, so would be great to hear for rule of thumb amount with or without mortgage.

[AinT]

My wife's life is insured through the mortgage to the remaining value of the house. (Mortgage is 100% in her name so only she is done through it)
I have separate life insurance through Sony Life for term equal to the duration of our Mortgage with a monthly payout if I die equal to 100% of the mortgage value + the building management fees etc. Both insurances also pay out in the case of permanent disability.

Basically either of us could live off our own salary without the mortgage payments included so that's what we covered.

Both my and her separate investments would more than cover education for our child and his expenses up to 18 so in the event of one of our deaths that's where the cash for those costs would come from.

She pays nothing, it's part of the mortgage package.
I pay around ￥3,000 per month.

[ricardo]

Income protection insurance may be a better way to go..

You’re much more likely to lose your income due to illness than to die.

So:

1. What are you trying to cover/protect?
2. Can you self-insure by saving? If not, how much do you need a month based on your own personal circumstances
3. That’s your answer...

[crew]

Both my and her separate investments would more than cover education for our child and his expenses up to 18 .

Any tips on how to compute this amount?

[AinT]

Any tips on how to compute this amount?

Standard assumed figure for education is around 700万円 to get a child from born to out of university assuming public education system and a reasonably good university.

He is 4 now and his monthly costs for everyday expenses (food, clothes, extra curricular stuff) are in the 3万円 range, this should go down over time but assume constant until 18 to cover unexpected expenses.
18*12*3 = 648万円

So together that would roughly come out to 1400万円 which is less than either of our individual investment savings. The fact that in the case of mine or my wife's death there would also be an extra 10万ish per month freed up from the lack of mortgage payment it would mean the remaining spouse and child would be more than covered.

It's back of the napkin math but accurate to within +/- 10%

[captainspoke]

...
It's back of the napkin math but accurate to within +/- 10%

I'd offer ¥35,000/month instead of ¥30,000, but your math otherwise feels very right.

[crew]

Any tips on how to compute this amount?

Standard assumed figure for education is around 700万円 to get a child from born to out of university assuming public education system and a reasonably good university.

He is 4 now and his monthly costs for everyday expenses (food, clothes, extra curricular stuff) are in the 3万円 range, this should go down over time but assume constant until 18 to cover unexpected expenses.
18*12*3 = 648万円

So together that would roughly come out to 1400万円 which is less than either of our individual investment savings. The fact that in the case of mine or my wife's death there would also be an extra 10万ish per month freed up from the lack of mortgage payment it would mean the remaining spouse and child would be more than covered.

It's back of the napkin math but accurate to within +/- 10%

Awesome thanks. I made the mistake of computing for US tuition and now I am just a broken man and have given up. haha

[AinT]

Additionally bear in mind that Japan is in a population crunch.
I expect that, within the next 10 years, there will be a lot of legislation passed to make it cheaper to put children through school.