Gone should be the days of mostly writing life insurance on husbands. Not only are women much more likely to be the family’s primary care giver but they are increasingly the primary breadwinner as well. According to a Pew Research Center analysis 40 percent of all American households in 2011 with children under 18 include a mom that is the sole or either primary earner for their family. Now this is great, however, considering that women are still less likely to have life insurance coverage compared to their male counterparts this is troubling news for thousands of families across the United States.
Life insurance is intended to replace lost income, which many more moms these days need to begin planning for. Now that we’ve covered the wage earning moms we can’t forget about the ever important stay-at-home mom.
Let’s try and imagine what the total cost would be to have a baby sitter, personal chef, nurse, book keeper, counselor, chauffeur, scheduler, cleaning crew and events planner? I’m sure I’ve missed many more hats but you get the point.
It’s common place for the breadwinner to buy tons of life insurance to protect their income but what about the stay-at-home mom who performs many if not all of the tasks we mentioned above? The fact of the matter is that moms either don’t have enough or even worse, don’t have life insurance coverage at all.
Salary.com published a study where they estimated that a stay-at-home mom juggle’s 94.7 hours of work per week and can be estimated to earn a salary of over $110,000 per year.
Considering all the work and tasks associated as a mom to keep a family and their home going, I know that if I ever lost my wife I’d be lost and would certainly need some assistance with basic family duties that mom was taking care of.
Now that we understand mom needs life insurance as well I know that you’re wondering…
How Much Life Insurance Should I Purchase?
There are many methods to utilize in determining how much life insurance one should purchase for themselves. The most important thing to remember though is that you should only commit to what fits the family’s budget.
My preferred three methods of determining how much life insurance one needs are as follows:
Method #1: Salary multiple such as 10 times your salary (or whatever multiple you prefer such as 15 or 20 times).
Method #2: Salary multiple + home mortgage balance.
Method #3: Full life insurance needs analysis which takes into account debt, salaries, assets, investments, mortgage, existing life insurance etc. to provide you a nearly exact figure as to how much life insurance your family’s financial situation truly merits. Luckily there are handy calculators you can use to make the calculations for you.
Again, most important is that you make sure you purchase what fits the family’s need and budget.
Speaking of life insurance and budgeting, purchasing life insurance on mom is oftentimes 10% to 20% cheaper than the same policy for a male if not even less expensive than that.
Women are, more often than not, healthier than men because they actually go to the doctor when they feel they need to. As a result their life insurance rates are cheaper.
With many stay at home moms you can purchase just a mortgage life insurance policy that pays off the mortgage and frees up that monthly payment to use on taking care of your kids.
The final piece of the puzzle is…
What Type of Life Insurance Should You Buy?
Your options for life insurance are going to be either term or permanent. Which one you pick depends on your goals and budget. We’ll dive into each type a little deeper to help you understand which option may be best for you.
Term Life Insurance
This form of life insurance protection will provide you coverage for the term duration you purchased. For example, you can buy term life insurance to last for 10, 15 or 20 years (even more). If you buy a 20 Year term policy the life insurance will expire after 20 years of policy ownership. Due to term life insurance not generating cash value and being temporary coverage it’s your least expensive life insurance option.
It is especially useful if mom does not get approved for a standard life insurance policy. In this case getting term life insurance with no medical exam can still be a very affordable option to take care of your families needs.
Permanent Life Insurance
Permanent Life Insurance is a general term used to refer to life insurance policies such as Whole Life Insurance and Universal Life Insurance. Both whole and universal life insurance are permanent plans (as long as you continue paying the premiums) that also generate cash value. The cash value accrued in the policy is available to borrow from and use as you see fit.
Due to permanent life insurance generating cash value and of course being, permanent, it’s a much more costly option for the same amount of coverage you can afford with term life insurance.
No Exam Life Insurance
Another option for life insurance is to purchase a no medical exam insurance plan. As you can guess, from the name, with these plans you’ll be able to buy life insurance coverage without having to undergo the medical exam. These are a great option for any applicant that is not in perfect health, or has several pre-existing conditions. Because they are going to be a faster option, they can be an excellent route for any mom that doesn’t have time to sit down and take a medical exam.
There are a few pitfalls to these policies that you should be aware of when you’re shopping for insurance coverage. The most notable one is that they are going to be more expensive than a traditional plan that requires a medical exam. The purpose of the medical exam is to provide the company with an idea of how much risk you are, but without taking the exam, they are putting themselves at a much great risk which is why the premiums will be higher in turn. If you’re wanting to get the most affordable life insurance coverage, you’ll need to apply for a traditional life insurance policy.
Another significant drawback is that you’ll be limited on how much life insurance protection you can actually purchase. Most insurance companies will only let you buy around $250,000 with a no medical exam policy. For most families that simply isn’t enough insurance coverage. If you want more than that, you’ll need to buy two no exam plans. Not having enough life insurance is one of the worst things that you can do for your family.
With that said if you are trying to meet a tight budget and get the coverage you need I would recommend a cheap term life insurance policy or if your are a working professional then check out if your trade organization carries discounted policies. For instance federal employees can purchase a FEGLI discounted policy. While they may not be the best policy they should definitely be considered.
No matter what you end up choosing you should take the time to learn about the different types of life insurance.
Shopping For Life Insurance
When shopping for life insurance for yourself, for the mom of your household or even looking for life insurance for your parents, the best thing you can do is to work with an independent agent who is licensed with and able to provide you quotes from multiple carriers.
The benefit here is that the independent agent will be able to find you the best deal by researching multiple company offers. In addition if you have a health condition they are able to shop your situation around to multiple carriers in search for the best deal given your specific situation.
We know that finding the perfect life insurance policy can be a long and complicated process, but it doesn’t have to be. Our experienced agents are here to make the process as quick and simple as possible for you. There are dozens of different kinds of plans that you can choose from, and we can help walk you through the process to ensure that you’re getting the best plan to meet your needs.