Life insurance for stay at home mom

[wewillsee]

We are reviewing our insurance needs again and we are considering getting a term policy for DW. Background is that only I work outside the home and make a pretty decent salary, but we have three kids at home ages 3 to 8. I am covered for life insurance but we started thinking about if something happened to her it may make sense to have coverage for several reasons:

1. I would have to pay for some type of childcare for the kids for many years to come. No family immediately nearby.

2. We are not saving anything for the kids college nor can we afford to (still paying off student loans). The plan is that when the kids are older, my wife will go back to work to pay for a portion of the kids college.

3. Her family has a history of cancer and between the $$$ that health insurance may not cover in a situation where god forbid she dies, there could be some significant costs.

I was thinking about a 10 yr or 20 yr simple term policy with coverage anywhere from $250,000 up to $750,000.

Thoughts?

[thyme4change]

I would definately have insurance on her. If your kids lose their mother, they have lost more than a childcare provider. You might want to take some time off, or work less hours, or even climb the corporate ladder slower. You might have medical bills if she has a long bout of cancer. Your kids might need grief counseling. I would pick what you want to pay, and find a term policy. $750k might be more than you need, but $250k wouldn't seem completely out of line.

[Colleenz]

I would think a ten year term if it is for the reasons you outline (i.e. pay for child care). After ten years your youngest will be 13, so should not need after school care. I would do $500,000 if you can afford it. Hopefully she is very healthy because the insurance companies can be very picky. GL!

[zibazinski]

You don't have to replace an income but you need a "nanny/housekeeper." I'd budget at least 20k per year for that. You should be able to get someone decent for that amount of money. I have retired teacher friends and others that do it just for some extra bucks or because they miss kids. My one friend also picks up the groceries and makes the evening meal. She does not live there. They pay her $200 cash a week for M-F, 9-6, but she does not have all day child care as the kids are in school. Summers that changes but the kids are in camp and other stuff so it isn't constant, either. She does not clean the house but does clean up the kitchen after herself. So add a maid/laundry person unless you want to do that job as well.

[zibazinski]

I'd say the 250k would do it to just replace her job. If you want/need more for college, that's extra you need. Don't forget the kids will collect SS from their mother that you can save for them.

[bobosensei]

Well you only need childcare until the kids are old enough to get themselves on the bus and to stay at home until you get off work. And the cost goes down once they are all in school (but you need to figure in something to keep them out of trouble during summers and breaks). So I think a 10 year term policy is more of what you need.

As for college and helath concerns I guess it depends on how much more it costs in premiums to be able to cover yourself at a level that you are comfortable with.

[Deleted]

Sorry, Zib, but I can't imagine hiring someone to work 9-6 if the kids are in school if she doesn't even clean the house. I'll also admit the price is odd. $200 a week sounds more like afterschool care than a full-time job, even if it does include a ton of personal free time.

[Formerly SK]

I'm a SAHM and we have a 100K 20yr term for me. Don't forget that while you'd have increased childcare/housekeeping costs, they would be offset by savings in food/clothing/transportation/etc. There's also SSI until the kids are 17. Ultimately we didn't feel the need for much insurance on me.

[thyme4change]

Term is so cheap - I would find out what it was going to cost you, and then get a payment you are comfortable with, and insure to that level. I'm guessing that you could find some wiggle room in your budget even if you got zero, but, you should have something.

[zibazinski]

That is actually cheap for someone to come to your home (that is HUMAN) and be there for your kids. The going rate is 300 a week and you need to provide health insurance and other bennies.

[BeenThere...DoneThat...]

...imo, it's easier to "replace" a lost salary, not lost "services"... better to have more than less... especially considering you two made a decision to have one of you be a stay home parent, and the reasoning behind that is not nullified due to death of the one... so having a policy payout that allows surviving spouse to be a stay at home until such time as the other would have returned to work can add up...


...meanwhile... any death benefit can be easily exhausted for:

end of life expenses
burial expenses
time off for the transition, possibly to include education/retraining costs for surviving spouse
outsourcing household management
supplementing childcare and development activities' costs
replacement costs for any household assets that may have terminated along with the spouse
...the list will go on...

[formerexpat]

My SAHW of our two children is insured for $750k. $750k x 4% = $30k a year, which would substantially, if not fully cover increased costs associated with child care, etc.

Once the children turned 18, those monies would be used for college and/or put in a trust for them / their future children.

My wife is in her early 30's and a 20 year term policy is $250 a year. Totally worth the $5k to have the peace of mind.

[zibazinski]

Absolutely and for that kind of money, you can hire someone top notch. You aren't even tapping into survivor benefits for them.

[denisem]

Yes, you should purchase a low cost life insurance policy for your DW. I read somewhere that if you add up all the services that a SAHM renders, and if you had to pay for those services, a SAHM would be earning about $139,000 a year! Her family history with cancer would push premiums up, so shop around for online life insurance quotes to get the best rates.

Denise

[morrisr2d2]

Do it, do it, do it. Term is insurance should be a no brainer for the vast majority of young families. Also, it's extremely cheap so don't skimp out by lowballing the amount.

Most companies have discount points. For example, at $500,000 the rates may be much cheaper, so you may find $500K isn't that much more than $250K. Same thing if you go with $750K, you may find $1M isn't that much more.

Kinda morbid, but money provides options, and if a spouse passes the other may want time off, money to fully fund children's college, pay off all outrageous medical bills, etc.

I think people just feel uncomfortable having so much insurance out, as if they are gambling their spouse will die. Term is so cheap it's worth the piece of mind to get a more sizable policy.