Since I’ve been tackling a lot of stressful financial situations in the lives of those I’ve counseled lately and in light of our upcoming baby #2, I thought I’d spend a little time to discuss the question of whether or not you should have life insurance on a stay at home mom. Let’s get a few basics out of the way first:
Strictly as insurance, I do not believe in “permanent” insurance (whole life, universal life, etc.). It is much more expensive than it needs to be as far as insurance goes and since we’re talking about INSURANCE (and not investments), let’s just stick to the idea of looking at term life insurance for a fair comparison in my examples and avoid all that debate for today.
I’m a HUGE advocate of having life insurance on SOME people. Do I need life insurance for Annie (who is not even 3 and brings in no income to our household) – NO. If she dies, we’d be emotionally crushed, but about the only impact to our finances would be the cost of her funeral and burial. A good way to be able to cover that is by getting a rider on an existing policy. It is cheap (per month) and $10,000 or so of coverage should be plenty.
Grasping the cash value of a life insurance policy can be a game-changer in your financial planning. Not only does it provide a death benefit, but it also creates a cash reserve that can be accessed under specific circumstances. More insight on this can be obtained from https://getsure.org/whole-life-insurance-cash-value-chart/.
Do I need life insurance on me? ABSOLUTELY – I’m the breadwinner in our family and if I die, Stacy needs income to be able to buy a Rolls Royce (strike) continue a reasonable lifestyle even if I’m gone. So that gets at the purpose of life insurance: replace needed income lost if someone in the family dies. That means if you don’t bring in any income to the family, you likely have no need for life insurance (beyond something to cover your burial). And that gets at today’s question – do families need to get life insurance on a stay at home mom? [Read more…]