Dear Dave,

My husband and I are both 37 years old, and we have two children, ages six and four. We follow your plan and we’ll be debt-free, except for our house, by next May. How should we determine whether to get 20-year or 30-year level term life insurance plans? --Valerie

Dear Valerie,

Based on your current situation, I think a 20-year policy would work out fine. However, if you’re planning on having more kids, you might want to look into a 30-year plan. Let’s take a closer look at your situation.

Twenty years from now, your kids will be 26 years old and 24 years old. Hypothetically, they both should have finished college by that time and be grown and living on their own. If you continue to follow my plan, you should also have paid off your home and be completely debt-free, and you will have been saving 15 percent of your income per year over those twenty years. That alone, on average, will give you more than a half-million dollars for retirement.

Do you see where I’m going? Eventually, you become self-insured by getting out of debt, staying out of debt, and piling up cash. It’s that simple! So, if you’ve got $500,000 or more in your retirement fund, no debt, and your children are grown and out of the house, even if you or your husband were to die at that point, the other would still be in great shape financially! -—Dave