In the course of working with estate planning clients, I am often asked for my opinion about whether they should have life insurance, and if so how much. Generally, if you are not responsible for financially supporting anyone else, and you have sufficient assets to cover your liabilities, there is usually no need to purchase a policy. If, however, a spouse, children or anyone else relies on you for income or financial support, you should definitely have life insurance coverage in place. Upon your death, the proceeds of the policy will pass to your named beneficiaries to provide them with liquidity and a source of funds. It is often recommended that you maintain coverage in an amount at least large enough to pay off your mortgage. If you have young children, you may want it to cover higher education costs as well. Term insurance will be much less expensive than whole life, which includes an investment component, and the premiums for a term policy will generally be small money in relation to the amount of coverage and thus peace of mind the policy can offer.
One important point to all the stay-at-home parents out there: don’t think that just because you have no income, you don’t need life insurance. If the stay-at-home parent were to die, the survivor would spend a shocking amount of money in child and household care to replace the services that the deceased parent was providing for “free”. A life insurance policy on the life of the stay-at-home parent will provide an important source of funds to cover those costs.
