Aug 30, 2010
Life Insurance is a Priority (Carole)
Here are the basics:
1. Buy Term life insurance. It's the least expensive for the best coverage -- it costs a small fraction of a Whole Life insurance plan (which also contains a lousy investment vehicle).
2. Each wage earner should be insured for ten times what they earn in a year.
3. If you are a stay-at-home mom (or dad) you should probably have about $500,000 in life insurance on yourself. It costs a lot to raise children to adulthood if the primary care-giver is no longer around. If your children are nearing adulthood, you could lower this amount a bit. But I wouldn't. How nice to have significant money to help your young adult children with college expenses and weddings.
4. Buy a rider on your policy for each of your children. I would recommend at least $10,000 each. Our youngest son passed away from cancer when he was three. The $5,000 policy we had on him didn't come close to covering his funeral costs -- and that was 10 years ago. We never thought it would happen to us either.
It's difficult to even think about anyone in your immediate family dying. But this is an uncertain world we live in and it is better to be well-prepared, just in case the unthinkable happens. I'm 48 (today, in fact) and already I've known dozens of friends and family members who have lost a spouse or child -- or both. It happens every day. You have absolutely no guarantee it won't happen to you.
Certainly a life insurance check for $500,000 or $1,000,000 (tax free, I might add) will not replace a loved one who has died, but it would certainly make your family's financial future much easier to manage. Believe me, you'll have enough to deal with if a family member dies. What a blessing it would be to pay off your house and invest the rest to live off of for the rest of your life.
This is a priority, and term life insurance is pretty inexpensive when you consider the incredible safety-net it provides for your loved ones.