[smbcpc]

Hi everyone,

I have question about life insurance. It is not necessarily about adoption but more about becoming parents. My husband and I are waiting for a referral and started thinking seriously about adding to our life insurance. I hope that some of you out there would feel comfortable sharing information or suggestions about what is a recommended amount of life insurance for a couple that is about to become parents. My husband has a full time job and I am self-employed so he is the primary provider. Does it make sense for him to insure himself only (through work) or both of us? Also, do some parents insure their child and why? We are new to this so I hope this is not a strange question to ask.

Any information would be appreciated. Thanks!

[kgembs]

I think this is a personal thing but I will share my thoughts anyhow. We have both got life insurance. Even if he is the primary income provider and you are a stay at home mom mostly, you have to think about what childcare would cost and how much extra cash it would take to raise your children without you. If you died, how would your husband cope with holding down a fulltime position and looking after the children and vice versa. I hadn't though about it before but my sister, who is a stay at home mom, pointed this out to me.


It is an awful thing to think about but more awful if it happened and you hadn't thought about it. Good for us all trying to do the best thing for our children!

[Andi72]

Even though my husband will be the only one working when our child comes home, we both have an equal amount on our policies, not sure if this is any help.

If you died, how would your husband cope with holding down a fulltime position and looking after the children and vice versa.

This is the exact reason we did our's the way we did.

[DianeS]

I agree. Life insurance should not *just* replace income - it should also provide enough money to pay someone to perform the services the deceased partner used to do.

As an example:
For a husband, his life insurance could provide income, hire a handyman, hire a boy to mow the lawn, etc.
For a wife, the life insurance could pay for day care, pay a cook, hire an accountant to do family taxes, etc.

[LucindaM]

We have carried life insurance for both of us since our first child was born 25 years ago. We carry the larger policy on my husband, enough to cover all bills, mortgage, etc and have enough left over to invest for an income. My policy has always been referred to as the "nanny fund". We carry enough on me to cover the cost of a housekeeper or nanny for at least 5 years. Hope this helps.

Lucinda

[Mailbox13]

I think the others have it down pretty well when it comes to life insurance. The basic goal is to allow the remaining spouse to cover the added cost of raising a child or children alone. That means we need insurance on both spouses even though my wife is a stay at home mom (I like the nanny fund comment). The only advantage to having any on a child is to cover funeral costs (heaven forbid). We get insurance on my wife and me through my work because it's cheaper than getting it anywhere else.

Don't forget it is possible for you and your spouse to both die (car accident). The life insurance would allow your children's guardian to insure they go to college and have all they need.

Also, do you and your spouse have a will? A will is your chance to decide what will happen to your stuff and who will take care of your kids. Without it, the state gets to decide. Wills and insurance mean that whoever is left when someone dies does not have to worry about money. They will have enough to worry about if you are gone.

[smbcpc]

Thank you so much for all the feedback. It is definitely hard for us to think about this subject but it is much more important to us now that we are going to be parents. Thanks again!

[Hopefully a Dad]

Make sure that you look into TERM life insurance. It is much less expensive, and provides you with insurance only for the term of the contract (10, 20, 25 years, etc). Many insurance agents will try to sell you what's called Whole Life Insurance, claiming that it is an investment as well as insurance, and that it builds up cash value.

This is true, but if your aim is to get insurance on yourself and/or your spouse, why would you mix in an investment with that? Invest to invest, insure to insure.

A general rule of thumb for the amount of TERM life insurance would be 10 times your husband's annual salary on him. The reason for this is, if your husband died and you invested the entire amount of the insurance you get, at a 10% average rate of return, you have replaced his income each year with the interest, and you can leave the principal alone.

On you, you would get much less than him, and you'd need to take a look at what it would take to pay off your debts or hire child care. You can get insurance on you a bit cheaper through things like a first to die policy or other things that an ethical insurance agent can tell you about.

If you'd like some more information, send me a PM and let me know what state you live in.

[Hopefully a Dad]

You'll also want to take a look at getting about 20-25k of TERM life insurance on your daughter after you bring her home. It should be fairly inexpensive, and the reason the amount is higher than it would be for a biological child is to get the cost of the adoption back in the case the child passes away. That way, you can adopt again if you choose to.

Again, beware of insurance agents who push Whole Life Insurance on children, claiming that they can build up a nest egg for retirement with it.

Whole Life may make sense for you (it doesn't in most cases), but just make sure you make the best, most informed decision that fits into your budget.

Sorry if I sound clinical or detached - the emotional side and the financial side of this have to be dealt with separately.