Earlier this year, I increased my life insurance coverage now that we became parents. I feel better having that safety net for my family. It took some time to get a number that we both felt comfortable with and finding a policy premium that went well with our budget.
Getting the right life insurance coverage is personal – each family has to find the right amount for them. One situation that can be a bit tough to figure out is how much coverage to get for a stay at home parent.
How Much Life Insurance Coverage?
The rule of thumb for life insurance is to get a policy that is 8-10x your annual income. With a stay at home parent, it’s not that clear cut. What has to be discussed is what would happen should the stay at home parent pass away.
Yes, it can be uncomfortable, but to determine a suitable amount of life insurance coverage, you two have to have the conversation.
- Grieving: Losing a spouse/parent is life altering and your family needs time to grieve. If you don’t have saving to cover the short time off from work, you may want to include that with life insurance coverage.
- Childcare: Check around places now to get an idea of how much you’d need to cover this expense.
- Final Expenses: Uncomfortable to think about, but have a ballpark figure of how much it would cost to cover your final expenses.
- Financial Assistance: If you want to leave money for your spouse and children to help with future expenses talk about what feels right for you.
Taking care of this while you’re in good health can help you to be more objective with planning and save you money when you sign up for a life insurance policy. Working through this can help married couples be better prepared for the future.
Thoughts on Life Insurance for Stay at Home Parents
Hopefully as you two build your net worth you can switch over to being self insured. For those couples with a stay at home parent, how did you determine your life insurance coverage. Did I miss any other considerations for couples to speak about when figuring out the right amount of coverage for their family?
Disclosure: Posts includes information sourced from Genworth Financial