Life Insurance for SAHM?

[humandraydel]

My wife and I just had a baby and she will be a SAHM. Should I get term life insurance for her? The biggest financial impact that I could see of my wife's untimely death would be the need to pay for childcare until age 5. After age 5 my wife will go back to work, but her income is relatively small compared to mine - probably 20% of my income. I was considering getting $100k for 10 years. Granted that is a small amount and a short term, but it seems sufficient for the risk. Am I not considering something that should make me want to go up in value and out in term?

[MonkeyMama]

I think that sounds fine. I have a stay-home spouse and the insurance I see suggested always sounds ridiculous to me. My kids are 8 & 10 and we are to the point where losing my spouse would have very little financial impact on the household. It's age 0-5 where the impact would have been huge. Childcare is a consideration, but it's not $500,000, know what I mean?

That said, I do have a fairly large life insurance policy on my spouse for several reasons. Our income was 50/50 and so we bought 50/50 life insurance for our kids, when they were born. We viewed this, at the time, primarily as insurance for our kids if something happened to both of us. The chosen guardian for our children lives in a very high cost area, so that factored into us feeling the larger amount was useful. (This is something I have NEVER seen discussed anywhere as far as insurance needs. I think it should be considered. I unfortunately know too many people who lost both parents - enough that we had to think that scenario through). I guess all this to say why I have kept the really big insurance, though spouse has not worked in over a decade.

There is another reason we have kept spouse insurance. My spouse has developed a medical condition and is no longer insureable. So, just something to consider. Insurance is so cheap these days, it sometimes doesn't hurt to over-insure a bit for the long run. If you think spouse may contribute more to the household financially, at a later time. (IF I could turn back time, I'd have gotten a longer policy. & I am happy it is a bigger policy, inflation-wise and considering he hasn't worked in a long time. That was not our plan when we had kids, for him to be home more than a few years. You can always cut short a term policy by cancelling it early. IT doesn't mean you are locked in for the long run). We always figured we'd cut the 20-year short, anyway, but I do mourn the loss of choice. A lot has changed since we took that insurance policy.

Some of this you can compensate for with your own policy. For example, your insurance policy may already be enough to raise kids and cover them if something happens to both of you. Mine certainly is now, given the 0/100 nature of our household income.

[Petunia 100]

You also might consider how the sudden loss of your spouse might impact your income. Would you take some time off to grieve? Depending on your child's age, s/he might really need you full-time for awhile while s/he is adjusting to the loss of his/her mother. Would you want to switch to a less demanding job since you are now single, your child's sole parent, and responsible for EVERYTHING at home?

[disneysteve]

Insurance is so cheap these days, it sometimes doesn't hurt to over-insure a bit for the long run.

I think this is really the answer.

You don't know what might happen. What if you both decide for her to stay home longer? What if you have more children? What if the child or she develop some health issue?

Term insurance for a healthy young woman is dirt cheap. For the cost a of couple of lunches out per month, you can double or triple the coverage. I think it's money well spent for peace of mind if nothing else.

[LivingAlmostLarge]

I got $500k for 25 years for $250/year. I SAH but we decided that he should have enough for college for kids and mortgage.

[ronantheconan]

Quite the answer. Everywhere I look, insurance offers seems to go down bit by bit. And getting a little over what you have won't hurt in the long run.

[Eagle]

My wife and I just had a baby and she will be a SAHM. Should I get term life insurance for her? The biggest financial impact that I could see of my wife's untimely death would be the need to pay for childcare until age 5. After age 5 my wife will go back to work, but her income is relatively small compared to mine - probably 20% of my income. I was considering getting $100k for 10 years. Granted that is a small amount and a short term, but it seems sufficient for the risk. Am I not considering something that should make me want to go up in value and out in term?

We just had our second child. I took out a 1 million ins policy for myself and a 500k policy for my wife.

100k sounds like a plan. I'd get it if I were you.