Life insurance on a stay at home mom

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Shaun
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Life insurance on a stay at home mom

Postby Shaun » Wed Jul 18, 2012 9:56 am

I've got life insurance to replace my income if something were to happen to me. But i was wondering whether or not I needed to have insurance on my wife also since she doesn't bring in any money I'm thinking that I should get some on her because if something were to happen to her I would probably have to take a pay cut since I couldn't keep the work schedule I have now and take care of the kids. I work nights now approximately 60-70 hours per week. I'd probably have to find a different job that would almost definitely come with a lower income. I'd also like to have enough to pay off the house and any other debt so that a lower income isn't a huge problem. Thoughts?

Does anyone have life insurance on their stay at home spouse?
Shaun

stannius
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Re: Life insurance on a stay at home mom

Postby stannius » Wed Jul 18, 2012 12:28 pm

My spouse and I both have life insurance. Neither is stay at home, however we save almost all of her income, so it's kind of similar. What would you do for child care? That can be a huge cost that you'd have to cover if your wife weren't around.

galactic
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Re: Life insurance on a stay at home mom

Postby galactic » Wed Jul 18, 2012 12:53 pm

i think it sounds like a smart idea. should anything happen to her, you'd have to find ways to get done all of the things that she currently does. the costs of these services are considerable. what would the cost of a live-in nanny be, plus someone to do the household work, plus if she maintains your finances and keeps the bills paid there's an accountant, etc. and this is just to keep things from going off the rails completely in such an unfortunate situation. you'd probably want to be able to support your family while you take some time off work to cope and re-organize and etc as well.

if anything it's good peace of mind.

Shaun
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Re: Life insurance on a stay at home mom

Postby Shaun » Wed Jul 18, 2012 1:05 pm

I never have a problem thinking about what happens if I were to die, but it's a lot harder thinking about what happens if she dies. If it happened now I would have about $260,000 worth of debt I would need to pay including the house. I think childcare would be the only big expense that I would have because I could handle all of the housekeeping and cooking, etc. and I really do believe that getting a Monday through Friday job working during the day would be a decent pay cut compared to what I'm making now. I think I would need some money invested so that I could supplement my lower income and keep about the same lifestyle that we have now.
Shaun

Shaun
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Re: Life insurance on a stay at home mom

Postby Shaun » Wed Jul 18, 2012 1:06 pm

And I would definitely need to cover expenses while I took some time off of work.
Shaun

partgypsy1
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Re: Life insurance on a stay at home mom

Postby partgypsy1 » Thu Jul 19, 2012 9:59 am

I think it is a good idea to have life insurance on anyone who has dependents. She has children, she should have life insurance.


Doing exactly what you are doing right now is a good idea for deciding how much to insure for, which is individual, such as taking time off work, downgrade to a lower paying job in turn for being available for your children with associated paycut, wanting to pay off portion of mortgage.

Get it but hopefully never use it!

Bichon Frise
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Re: Life insurance on a stay at home mom

Postby Bichon Frise » Fri Jul 20, 2012 8:36 am

I don't know if simply having dependents is a sole reason to have life insurance. What if you had dependents that were 15 and 17? They can more than likely take care of themselves. What if you are financially independent? no need for life insurance, right?

People need to think about what would happen if they or their spouse kicks the bucket. If a non-working spouse dies and is taking care of dependents and you are not financially independent, you need to think about what kind of care you want for your kids. If they are young, I would want a full time nanny and I would be willing to pay top dollar for someone to help cook, clean, take of the kids. So, we insure my spouse accordingly. But, as the kiddos get older, the nanny will be liked less and less and eventually, the kids will believe they are completely autonomous. So, the nanny may not make it the entire 18 years the kids are under my roof.

Ideally, my non-working spouse would find someone else to marry if I were to kick the bucket, and my spouse feels the same way. We feel it is better for everyone in the long run. My only rule is they can't bring a date to my funeral. 8)
Bichon Frise

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Shaun
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Re: Life insurance on a stay at home mom

Postby Shaun » Fri Jul 20, 2012 10:10 am

Bichon Frise wrote:My only rule is they can't bring a date to my funeral. 8)

And they have to buy a new bed.
Shaun

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Re: Life insurance on a stay at home mom

Postby bpgui » Sat Jul 21, 2012 5:36 am

Bichon Frise wrote:Ideally, my non-working spouse would find someone else to marry if I were to kick the bucket, and my spouse feels the same way. We feel it is better for everyone in the long run. My only rule is they can't bring a date to my funeral. 8)

I've told my spouse that I'll haunt her if she remarries :)

Shaun wrote:
Bichon Frise wrote:My only rule is they can't bring a date to my funeral. 8)

And they have to buy a new bed.

Nah, if the new husband wants to lie down in that... :)

We have just enough insurance through private companies on each of us to pay off the house. She also has a good sized (few hundred thousand) policy provided to her by her employer... so only good if she is working there at the time. I have a fairly small one provided by my employer.

No kids right now, but if we decide to have any, we'll probably up the amount.

josetann
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Re: Life insurance on a stay at home mom

Postby josetann » Sat Jul 21, 2012 2:36 pm

We've decided that neither of us really needs life insurance at this point (though my wife currently has a minimal amount that's automatically provided). If something happens to me...well I'm not bringing in any income, and she might have to work a bit more to pay for childcare, but the numbers work. If the reverse happens, we'd get some kind of social security benefit while the kids are still under a certain age (she figured it up before, and it was enough to live off of). Our bills are pretty low, so we can make it on a pretty low amount.

But regardless, it's good to think about this things every so often. Don't just assume you need it because you make money, and your spouse doesn't because he/she isn't bringing in an income. Look at what would happen if something happens to one (or both) of you, and see what's needed to maintain a decent lifestyle for those left behind.

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Re: Life insurance on a stay at home mom

Postby kombat » Sat Jul 21, 2012 9:42 pm

josetann wrote:We've decided that neither of us really needs life insurance at this point (though my wife currently has a minimal amount that's automatically provided). If something happens to me...well I'm not bringing in any income, and she might have to work a bit more to pay for childcare, but the numbers work. If the reverse happens, we'd get some kind of social security benefit while the kids are still under a certain age (she figured it up before, and it was enough to live off of).


What if - God forbid - you BOTH die? How will the kids be provided for?

Term life insurance is dirt cheap. There's really no excuse not to get it if you have dependents.

josetann
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Re: Life insurance on a stay at home mom

Postby josetann » Sun Jul 22, 2012 4:48 pm

kombat wrote:What if - God forbid - you BOTH die? How will the kids be provided for?

Term life insurance is dirt cheap. There's really no excuse not to get it if you have dependents.


Survivor benefits are designed for both a spouse and for children. So there's no spouse to get benefits...but the children can still qualify (under age 16, or under age 18 if still in school...rules are obviously more complicated than that). Our kids will still be provided for.

Life insurance, to me, is meant to carry on a decent/similar lifestyle. It's not supposed to like winning the lottery. "Well, sorry kids, your mom/dad just died...so we're going to Disney! YOU get a car, and YOU get a car, and I get a new house, and...." Nope, for us, we'd only get it if we couldn't sustain a decent/similar lifestyle. It means we won't lose our house, kids can still go to school, still have transportation, still have healthy food on the table, etc. We don't need life insurance to provide for our kids in the event of our untimely death(s), so we don't have it.

*Again, the disclaimer...my wife automatically gets life insurance, but we're going to look into opting out in the future since it's not actually free.

DoingHomework
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Re: Life insurance on a stay at home mom

Postby DoingHomework » Sun Jul 22, 2012 5:29 pm

josetann wrote:
kombat wrote:What if - God forbid - you BOTH die? How will the kids be provided for?

Term life insurance is dirt cheap. There's really no excuse not to get it if you have dependents.


Survivor benefits are designed for both a spouse and for children. So there's no spouse to get benefits...but the children can still qualify (under age 16, or under age 18 if still in school...rules are obviously more complicated than that). Our kids will still be provided for.


But...but...but...

Life insurance is a funding source for the children's needs after you die. It is not a plan nor does it, by itself, specify that they don't get to blow it all in Disneyland after the funeral. You'll need a lawyer to set that up for you, not a life insurance salesman.

josetann
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Re: Life insurance on a stay at home mom

Postby josetann » Sun Jul 22, 2012 5:58 pm

DoingHomework wrote:But...but...but...

Life insurance is a funding source for the children's needs after you die. It is not a plan nor does it, by itself, specify that they don't get to blow it all in Disneyland after the funeral. You'll need a lawyer to set that up for you, not a life insurance salesman.


And we've deduced that our kids can be properly taken care of while they are still kids, even if one (or both) of us passes away. Unless I plan on taking care of all of their needs until age 30+, I don't need life insurance to make sure they're taken care of until 30+.

In short, one of us dies, kids can still have a decent lifestyle. Both of us passes on, they'll still be taken care of (obviously there'd be drastic changes in their lifestyle, but that would have nothing to do with lack of money).

To throw out some numbers...at one point my wife figured we'd get $3,800/mo or so if she died. I figured our expenses for a family of four, we need $18,000 to live a comfortable (for us) lifestyle (includes utilities, food, gas, maintenance on one vehicle, and one vacation a year along the lines of 3-4 days of Disney and a 7-night cruise). $12,000 would still fund a decent lifestyle (going out to eat would be cut from 2-3 times a week to twice a month, vacation would be drastically cut back, etc.).

If something happened to her, we'd be a family of three living on 2.5 times the income that's needed for our current family of four to live on. So...we don't need insurance to cover her lost income. Heck, we'd still have plenty left over to put in retirement, college funds, etc.

If something happens to ME...her income wouldn't necessarily be affected. She would probably need to pay for childcare, but her take-home would still be more than enough to take care of the necessary bills, the unnecessary bills, retirement, college funds, etc.

If something happens to BOTH of us, then our kids' lifestyle would obviously change (for one thing, I don't think they'd be traveling as much). The person now taking care of them won't get as much in Social Security benefits as say, I would (because they wouldn't get anything for watching the kids...but the kids would get something, same difference really). Their living expenses shouldn't rise dramatically (they could use the same house they're currently in...or move in ours...either way they have a house and could sell the other). The additional money could be used to help the kids out with college and what-not. And really...if we can last where we're at for another few years or so...college may not be a big concern (cost-wise) for our kids.

Basically, we've crunched the numbers, looked at what would actually happen in each scenario, and are comfortable that those who are left behind won't suffer undue hardship due to a parent (or parents) dying early.

I think it's good for people to look at all the scenarios and make sure their family will still be taken care of. In the OP's case, he realizes that even though his wife is not bringing in income so to speak, she does play an important part in the family's financial well-being. If something were to happen to her, his income may not be enough to support their standard of living, so she may want to consider having a life insurance policy of her own. But in the same vein, I can't advocate having a life insurance policy just because. If you need it, get it. If you don't, then don't.

Bichon Frise
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Re: Life insurance on a stay at home mom

Postby Bichon Frise » Sun Jul 22, 2012 10:24 pm

just throwing this out there. If I had a family of 4 who made $73k and only spent $18k (and claims to pay virtually no taxes), I'd slice out a couple hundred bucks a year to make sure my family was taken care of. and then I'd slice out even more money to make sure I had adequate disability coverage. but, that is just me.

The comfort the private insurance policy would bring is well worth the 0.7% of my pay (if you are healthy, obtaining LI through a group policy at an employer is a bad idea, BTW). SS is a sticky and complex web (that is ever changing to boot). And I would want to make sure my childrens were well taken care of and would at least have the option of college without drowning them in debt. Again, just me.

To loosely summarize the start of the chapter from the Boglehead's book on SS, "depending on government programs is no way to live."
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."

avocado wrote:Good to see you back, I was starting to miss your incisive commentary!


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