We made sure we could maintain standard of living for the family. Plus, we wanted to make sure that college was fully paid. When Tyler was born, we added a bit more to our policies to ensure his education was also fully paid.

I don't remember exactly how much life insurance we have on dh. I know we have enough to cover things like house and any car payments, and bills we might have for a couple of years.

I have life insurance also. I'm a SAHM, but I provide a lot of different services for this family like maid, cook, child care, etc. If something happened to me, my family would somehow have to cover those duties and there would be extra expenses.

I agree with adellabedella. So many SAHM don't have life insurance. I think it is just as important as the Father's Insurance.

Gayle

DH and I both have life insurance. We each have enough to pay off the house and to make sure the kids college would be taken care of and the surviving spouse could be able to pay off any bills and be comfortable without having to worry about money for awhile.

I would not trust the insurance agent's "advice". Figure out what you would need and get the policy. Make sure your agent and insurance company is reputable. Sometimes there are so many exclusions in the policy they are worthless and you don't find that out until you try to cash it in.

Are you getting term life insurance or permanent life insurance? There are different kinds of insurance some accrue cash value and some do not. Permanent life insurance must always pay out term life insurance does not.

Even a SAHM should have insurance.

You may want to look into disability insurance in case one of you should become disabled and unable to work. Disability insurance pays not only the bills but can also cover care expenses that medical insurance does not cover.

I once heard the rule of thumb is two and a half years of salary. Then again, you have to consider how much you're making now, and what are your fixed expenses? Kids can borrow for college. And if you and your husband work, there's Social Security survivor benefits for your children up to age 18.

We have two policies on each of us. When we were about 28 we took out 250,000 30 year term policy on each of us. It cost about 185.00 a year each . We are both healthy and non smokers. Now 10 years have burned off that policy and we make alot more money now. A few months ago we bought a million dollar 30 year term policy on both of us. It cost about 950.00 per year for each of us. We kept the original policy in force since it is so inexpensive. Now if one of us dies the the other will get 1.25 million as long as these policies are in force. We are debt free including the house so this would allow the other to invest the principal and live off the interest if they had to. Having these polices makes me very comfortable knowing future needs will be taken care of. The surviving spouse can still work if they want, but could live comfortable for awhile if they didn't. We are now 38 years old. You are still young so term insurance shouldn't be too expensive.

Thanks everyone!

cb, my husbands policy is 500K at a 30 year term and is almost $800 per year. We've been advised that he should at least double that amount.

We have no debt, including our houses or cars so that wouldn't play into the need for money should something happen to my husband. Basically what it would take care of is our children's college as I could live off what we have in investments and CD's. So this is why I'm confused and curious about how to figure the amount to be insured for.

We cashed in our policies due to the fact our cash value was going down. We know know that the agent lied about the type of insurance he sold us, but that was 40 years ago and the company was investing into high risk investments. By the time we realinzed it--too late. And due to medical problems, we could not change it. My warning is make sure that in 30 years, you will still have the same amount you would get today. Know where the company invests the money and watch the yearly statements and cash values.

How old is your husband? Does he smoke? 800 sounds high for 500,000 as I assume he is 40 or under. Maybe it is just higher in California. I would double it on him and I would get the same coverage on you. If something happened to you, he still has childcare, college education, ect. to pay for while he presumably still works. We don't have any house or auto debt either and will have money saved and invested too. I just kinda viewed it as a cheap lottery ticket. Dave Ramsey recommends Zander insurance to get your term life quotes. You can get a quote online.

My husband will be 43 next month but the policy was generated before he turned 40. He does not smoke (never has) and is in good health. I think it's just more expensive here in California.

You need a policy on your life, too.

The basic service provided by life insurance is to replace an income: to provide the income (or service) provided by the insured in life, throughout the period of need of the dependents.

The amount that one needs depends on the financial needs which the family has: in the case of the income-provider, to provide the income that the wage earner provided.

I agree that it is wise to carry coverage on a SAHM, as well ... for, as several have said, a SAHM provides several services which will need to be replaced, and usually paid for, following her death

Some needs are to pay off debts, including credit card, car loan, mortgage, etc., the major priority being the rate of interest being paid relative to the rate of return that may be obtained on investing the proceeds of the insurance. The main one is usually mortgage, whether immediately or over a number of years, the choice of which to use depending largely on the expected rate of return that the survivor can develop on the fund that would have been used to pay it immediately, related to the rate being paid on the mortgage - and including tax considerations on each.

Many insurance companies have sold whole life, or permanent, insurance, over the years, which covers the insured until death and builds up cash values, due to the premium being higher than is needed to cover the cost of coverage in the the early years. The concept of whole-life insurance troubles many of us, as it's quite expensive.

Many recommend term insurance, which runs for a given number of years, then expires. Many carry renewable term, to ensure that at the end of that term, they will be able to buy for another term ... sometimes/usually without a new medical test being required.

In those situations, as the possibility of death is low in early years, the premium rates in the early years is low, then escalates in later terms, when the possibility of death during that term increases.

The total need is largest then, as there will need to be assets in place that will provide an income for the survivors to provide for their ongoing needs ... which in the case of a young family will include surviving non-income-earning spouse and the young children through the years as they grow, then at least part of their advanced education. Will the former SAHM continue to stay at home, or will she go out to earn an income? Is she equipped to obtain an income which will provide a net return, above the extra costs that will be incurred? As the children grow, in the case of Mom will she join the work-force? Will she need re-education in order to do this efficiently?

As the years go by, current needs usually increase for a time, which children are growing - but as years pass, the total amount neede to meet the family's needs will decrease. Thus, many families arrange for a total amount of coverage to reduce "reducing term", as the price per unit of insurance increases as the person insured ages.

Once the offspring are on their own, what will Mom's income needs be? Will she be able to earn enough to live in the manner to which she had expected/become accustomed?

How capable is the survivor of managing money wisely? Will s/he be able to manage it well? Some would fritter such an unaccustomed large amount away, and be destitute within a few years.

In such a case, perhaps it would be well to invest much of the proceeds of the insurance into an annuity, to provide ongoing stable income ... but the rate of payout usually depends rather heavily on the rates of interest available at the time it is set up ... which will not be altered later. That would have been much better in the early '80s, when Canada Savings Bonds (briefly) paid 19% ... but not so hot in current low-interest-rate conditions. Especially since many feel that, with the huge debts being carried in our economic environment, and the lack of private savings, and with recent disruptions in the financial markets to cope with, there is almost a certainty that interest rates will soon rise, probably substantially.

I have to go, as I need to do some things ... but this will help you consider soe of the parameters involved, I hope.

Good wishes as you make your plans.

ole joyful

P.S. One other major, major issue ... don't forget the ravages that inflation will wreak on your asset base and future costs.

Many retirees who forgot to factor in that problem have lived to *regret* that overloooked situation ... which usually more strongly affects people who choose to invest their assets where their future asset (and, less so, income level) is guaranteed).

You want guarantees ... there's usually costs.

o j

I've heard you need 10 to 12 times your annual salary in term insurance.