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Covering Your Family’s Needs with Life Insurance

Covering Your Family’s Needs with Life Insurance post image

 Today is officially Life Insurance Day thanks to the dedicated work of Jeff Rose. 

If you haven’t recently checked, today would be a good day to sit down as a couple to make sure you have enough life insurance to cover your family’s needs.

Earlier this year I increased my term life policy in part to leave something for raising our baby girl should something happen to me.  It may not be a fun thing to think about but as a couple with parents we knew we needed to review all of our finances this year to make sure the big things were taken care of.

If your family situation since the time you’ve bought a policy, re-calculating your needs can be significantly helpful to your loved ones.

Finding the Right Number

Every family is different, but in general when you’re trying to calculate how much coverage is enough, there are a few factors to look at:

  • Grieving: Losing a spouse/parent is life altering and your family needs time to grieve. If you don’t already have savings to cover the time off from work, you may want to include that with life insurance coverage.
  • Final Expenses: Do you have a general idea of how much your final expenses would be? We used the estimate of $15,000 for funeral expenses.
  • Financial Assistance: Do you want to leave money for your spouse and children to cover debts and help with future expenses?

For us,we would like to have the remaining debts like the mortgage paid off to lessen the financial obligations for the surviving spouse. We’d also like to have some money set aside for our little girl.

If you’re young and in good health, you’ll be surprised at how cheap term life insurance premium are. Better to get it now  to take advantage of lower premiums than waiting. As you get older it can get more expensive (still an affordable option my opinion though).

Thoughts on Life Insurance for Parents

If you’re a parent, have you checked your life insurance coverage? How did you determine what you needed?

by Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

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  1. I’m curious when it’s appropriate to give up life insurance. We have LI through my DH’s employer, but he took a buyout so, while we’ll have the same medical coverage as if he were an employee, he would have to fill out an application to continue getting life insurance. He’s hoping to get a new job, but at 61, it could take a while. The issue with filling out an application is the fact that he had two different cancer diagnoses in 2011. He’s cancer-free now, but I’m thinking getting life insurance would be tough if not impossible at this point.

    1. PawPrint, you would have to look at the costs to see if life insurance would be in your budget. You may want to get life insurance to cover just the essentials should something happen to you or your husband. One option is checking out AARP and their term life policies. You may be able to find something that would work for you.
      http://www.aarp.org/benefits-discounts/insurance-products/

  2. I’m not a parent and as such don’t have any life insurance other than through my employer right now. When I do have a kid I will be getting insurance though.

    1. Why not lock in your instability now when you can get better rates? Do you know what the cost of waiting is? What if you become uninsurable? Just a thought!

      1. I have considered it but I don’t think it will be that big of a deal. I’d also have to buy a longer term which would cost more in both premium and number of months I pay. Could I become uninsurable? possibly… but that could also change my mind about kids.