You can always give SD some of the life insurance, if so inclined.

If your DH dies while SD is a minor, BM would get social security for SD (plus the military benefit).

SD has access to education/college benefits, so that is huge.

Plenty of parents don't have life insurance policies, period. With his military benefits, SD is not completely left out in the cold.

Yes, SD would live with BM if your DH passed, unless she wanted to give you custody, I suppose.

My DH had no life insurance with SD as beneficiary, BM would have just gotten social security.

Just a tip, I would be more concerned about the policy for you being only 30-40K. Once you get done with his burial costs, there won't be a whole lot left over. If your housing costs require two incomes, you might want to encourage him to get a larger policy to make sure that your housing is secure if the worst should occur.

IMHO, kids do not inherrit when there is a spouse.  Of course when there are Skids, that increases complexity.

My parents are each other's beneficiary.  My brother and I are equally their beneficiaries upon their deaths. Intact initial marriages and families simplify the iherritance topic.

DW and I are each the other's beneficiary.  SS is our beneficiary upon our deaths. DW and I met when SS-31 was 15mos old. We married the week before he turned 2yo.  I raised him as my own.  He asked me to adopt him when he was 22yo. We made that happen.

Even with Skids, I stand on this model.  In the event of a yours and ours or a yours/mine/ours kid model, the spouses are each others heirs.  A Will can divide an estate upon the demise of both spouses.  Xs, get shit for nothing.  

Unless there is a CO defining something else.

I had never put any thought into the yours/mine/ours inherritance thing until now.  What to do when a couple each have prior relationship baggage spawn and joint spawn?  I suppose that would depend on what each category of kid was likely to inherrit from their other parent.  

I might consider more heavily awarding inherritance to ours kids when the yours, and mine kids other parents have assets to award to them in an inherritance.

The simple thing to do is to divide equally between yours/mine/ours kids.   I like the Will with the caveate that anyone who contests the divistion of assets is immediately disenherrited.  That keeps an X from manipulating a kid to blow up the whole inherritance thing.  An X manipulating results in the adult kid forfeiting their inherritance.

DH had nothing when I met him. Everything we have, we built jointly and so when one dies, the other inherits everything. Following both of our deaths whatever is left over, if anything is split between his daughter and my brother. DH is significantly older than I am so likely I will outlive him.

My primary asset is my home (which was my marital home with my ex and I bought him out). I wrote my will a few years ago and set it up so my house goes into a trust, managed by my DH and DD. The trust specifies that DD24 and DD22 can live in the house as long as there's a house to live in, as long as they contribute to the expenses (split evenly between whoever is living there). I have a life insurance policy through work that will go to DH and be used to pay any remaining mortgage and future larger expenses, like a new roof for instance. DH is the only one who can opt to sell the house, only after both kids are 25, and the equity would be split between the 3 of them. If DH stays in the house until he dies, the equity will be split between my kids. (Initially, DH's third was going to go to his kids, SD32 and SS30, but I changed that a year ago when our relationship broke down and I realized they wouldn't be above forcing my kids out if DH died and my kids were still living there). I know some people will think that DH should get everything but I come from a family that believes in inheritance (in my parent's home country it's actually illegal to disinherit children). Also, my parents are the ones who bought my ex out of the house, and put my kids through school, so a portion of the equity in the house is from family money. And, I have a good pension that will go to DH, so he'll be fine. 
As for DH's money, he cashed out a pension from a government job he worked for 20 years and invested it. I initially insisted that he make his kids equal beneficiaries with me. At the time, I had close relationships with them and didn't want to be left to deal with disinherited stepkids. After his kids'  recent behaviour, he's changed it so that all of it goes to me. He's also changed his alternate power of attorney to be my DD. It used to be SD, but he realized that she can't be in the position to make decisions for him when they've been estranged. 
It's true that when you're in a second marriage / step relationship estate planning is insanely complicated, and requires a lot of thought (and a good lawyer who's seen all of the ways this can play out badly). 

That not even covers a price if a car.   Number one. He should have much more insurance.  DS is 3.  You have another 15 to 20 years to support him.  College.    You should be looking at. [ $40,000 a year  X 20 years ]. $800,000 in insurance minimum.  
 You have social security death.  Not included.   Inflation not include.  
You should have control of the money. 

1.  as others have said.. 40K is not a lot when you factor in the costs you will incur at death.. it may help cover a few months of missing income.. from him.. but it's really not enough to set you up well.

2. also.. you are more than welcome to gift SD money if you choose.

3.  This should be NUMBER ONE.. but know the rules in your legal jurisdiction..state.. whatever.  In my state.. if someone dies without a will.. 2/3 of his estate (the life insurance and any property deeded to you won't go through probate normally). will automatically go to CHILDREN..  not just minor children.

so, let's say you have a husband who has assets in his name.. that are not otherwise deeded to a successor and there is no will.

he owns 2 cars worth 10,000 and he owns stocks that are worth 100,000.

he dies.. no will.

You get equivalent of 3k worth of value of cars.. and 30K value of that stock.. his children will equally split 7K and 70K value.. you can see how that could be a big shock!  If real estate is not titled to go to the spouse.. the kid's could end up getting equity of the home.. and THAT could force a sale?

so no will is a no no

DH and I are going through the will / insurance discussions and estate planning now. He has no will and no life insurance. The estate planner was shocked and said to him "do you know what will happen to your wife if something happens to you?!" This is also after discussing the situation with SDs and knowing the state will step in and take over the assignment of assets. Yep, his kids would get a good chunk of it. He doesn't have much right now, but I reminded him his cash assets (car, bicycles, checking/savings, investments would all be up for grabs). And if he thinks OSD would play fair he's got another thing coming. So we are working on it.

None of my assets with go to SDs. Only DH, my sister and niece are beneficiaries. 

I've thought about this, too. With all kids being teens or adults and if each spouse or their family has any real assets, i think keeping finances separate might be the way to go. My SO has 4 kids, split between 2 BMs, each BM is married and has significant assets. The skids, however, are struggling and will likely never be self-supporting. I have 2 kids and my dad has significant assets. I wouldn't want to divide any inheritance i get from my dad so that each of my kids only gets 1/6 instead of 1/2. ETA and i know that my SO will try to get his kids as provided for as possible. 

DH has a small insurance policy (30 or 40k I think) that he has me named as beneficiary. When DS3 was born, I reminded him COUNTLESS times to update it and add SD as well. At the time DH said he didn't have SD13's SSN and would just "do it later". Well, 3 years later and he still hasn't gotten around to it. Should I feel guilty that he hasn't spelled out anything for her? 

you shouldn't but you do because you realize how important it is and the fact that after 3 years he doesn't care how his dependents will survive without his income is appalling 

his 30-40k sounds like a whole life policy which is better than $0 but sounds like he's concerned about making sure there is some money for his final expenses and that's it!!!

Is this all he can qualify for/afford? 
 

If not hound him to put more in place to better cover his dependents

If so then it kind of is what it is  

DH was in the military, so there is a separate cash benefit that SD would receive if she were to be under 18 and DH were to pass. She would also still have access to an education/college benefit. But nothing else other than that. 

I'm ASSUMING if SD13 were under 18, then she would live with BM because I would have no legal custody rights. Does anyone have custody orders spelled out if a bio parent dies?
 

IF there is a separate cash benefit does it have a policy number to confirm it exists? Any documents highlighting how it works? Access to college is great but what if god forbid he passes while his daughter is 14 and suddenly leaves her mother (or guardian) to take care of her on a single income? Because of this there is several thousand dollars of debt child care expenses so she has to chose to work to pay off the debt at 18 vs attend college / risk accruing more debt 

consult with an attorney but typically when one parent does the other parent gets custody by default unless they're unfit  / unwilling / unable ... who you want to take custody in a situation like this needs to be discussed in advance and these desires documented in a written notarized agreement 

Thats awesome you're thinking ahead and considering the skid  

The amount the government would give is not nearly as satisfactory as a private policy (it's the government and if they have to give anything for  "free" they're going to be thrifty af

Most divorce decrees state each parent is supposed to carry life insurance for the benefit of the kid while they're dependents.  

If you died first, you get a will and mention who you want. but of course DH Will have to support your kids, Him working in taking care of the kids would be a hard job .  if your DH passes away first and all the money you have you need for you to live on. You just be taken care of first.  Young bio kids have to be taking care of .  Take the taxeabke income from last year and multiply it by number of years you need it   20  or 30. Years x30.  Could give me some idea of how much money you need to survive up until everybody's on their own.  Like Bank also you can use these things out. Like this,  look up like 401k calculators

I would bet that his life insurance policy is either a whole or universal life policy.

They tend to be sold as a combination life insurance policy and investment.  They are IMHO a shit investment and shit insurance.

It is far better to buy a term life policy for 10X+ the policy value for a fraction of the premium and invest the difference in premium between the term polcy and the universal/whole life policy into a diverse mutual fund.

Though I never took the exam I did complete all of the coursework for my Series 6 and Series 63 license which is the trade licensing to sell whole/universal life and mutual funds.

I could not sell a product I did not believe in and ended up taking an offer to return to my engineering career rather than finish the licensing and go into financial advising.

For the monthly premium of a $30K to $50K whole/universal policy DH should be able to get several $hundredK in term life insurance and invest several $thousand a year in a mutual fund. 

For apples to apples comparison, Whole/Universal premiums can be in the $5K (female) and $6K (male) a year range  for a $500K policy while a $500K term life policy would be in the $300/yr range ceteris paribus. So, buy the term policy and invest the difference in premiums.  You will get far better insurance coverage and a better growth position investment than whole/universal policies will give you. 

There are some other things to consider regarding tax free inheritance, annuity income, etc... so I advise a talk with a licensed fiduciary investment advisor

So you think it's best to do term life and decline a permanent life policy... and with the money you would've spent on permanent life- put into our mutual funds? 

I am 65. DH is 73. We have wills written to our satisfaction. The problem: His stepdaughters. He is cowed by them and in 19 years of marriage has never called them out or put them in their place. I am 100 percent certain that in years ahead if they drag him to an attorney he would change his will to my detriment. (I know according to law in my state I am entitled  to 1/3 of his estate in any circumstances ... but that's not enough.) This exact scenario happened to my cousin. My question: What legal means can I take to protect myself from this scenario? Can I have DH put his assets in a trust for me? Escrow account so they would be "outside" the assets listed in the will ? I know I need to consult an attorney... just wondering if anyone else out there faced this fear and had some advice. TIA