Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
Video Transcript: Today's question is, "How much life insurance should a stay at home mom have?" Well if a stay at home mom is the only earner, she's a single income with children, she needs to look at all the liabilities that she has today.
So if she has indebtedness, whether it's credit card, mortgage, or any kind of auto payments, she'll want to look at those or future obligations for her children where she may have college education, or retirement plans for them. She'll want to be able to do some kind of coverage that she can do to protect them in case something happens to them. And remember if they have an ex-spouse involved, you'll want to make sure that that person also has insurance on them so if something happens to him that mom and the child are taken care of.
If you were to hire workers to provide all the services that a stay at home mom performs each day, the cost would be staggering. So it is important not to underestimate how much life insurance to purchase on a stay at home mother or father.
However, with most life insurance companies, the stay at home parent will only be able to purchase the amount of coverage that is on their "working outside the home" partner. Therefore, when you look at how much insurance to purchase for your family, you will need to look at the whole picture. Most people buy enough life insurance to replace at least 5-10 years of income, or financial value, as in the case of a stay at home mom or dad.
President, Lane Independent Agency, Southern California
Depends on what your family's needs are and likely will be. How many kids do you have and what are their ages? You want to be sure there is enough to help them get through college if not even further. Do you have a mortgage? Do you want to pass that home to one or more of them? Cover that mortgage then. Do you want a bit of a legacy, or just ensure they can make it through schooling and the start of their career(s). Start with multiplying your annual income by at least three to five times. Ten times is the optimistic target if you can afford it. You probably want to start with term, or temporary insurance. New York Life has just reduced their pricing for these policies.
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So if she has indebtedness, whether it's credit card, mortgage, or any kind of auto payments, she'll want to look at those or future obligations for her children where she may have college education, or retirement plans for them. She'll want to be able to do some kind of coverage that she can do to protect them in case something happens to them. And remember if they have an ex-spouse involved, you'll want to make sure that that person also has insurance on them so if something happens to him that mom and the child are taken care of.
However, with most life insurance companies, the stay at home parent will only be able to purchase the amount of coverage that is on their "working outside the home" partner. Therefore, when you look at how much insurance to purchase for your family, you will need to look at the whole picture. Most people buy enough life insurance to replace at least 5-10 years of income, or financial value, as in the case of a stay at home mom or dad.