Are you the primary breadwinner in your household? Do you have life insurance? It’s amazing how few people feel that they need adequate life insurance, if any at all. You might think you have a nice cash and investment cushion set aside in case of emergencies, but it most likely isn’t meant to last a lifetime for your family. If most people had adequate funds to support their families over a lifetime then they would probably be retired. Consider some of the points below to see if you are prepared in case something should happen to you.
Do you have children? If so, then a lot depends on their ages. The average cost of raising a child from birth to 18 years old is roughly $400,000. From there, many parents feel the obligation to pay for their 4 year college degree as well, which could tack on another estimated $400,000 if your child was born today. If you have multiple children then you can extrapolate the total costs from there. Unless you have millions saved then you should probably look into a life insurance cushion.
Most people think that only the breadwinner needs to have life insurance but that couldn’t be further from the truth. If there is a stay-at-home parent caring for the children all day you need to consider what you would do in the event that something happened to that parent. The children would most likely still need daily care, which would case the need for a nanny or sitter each day. This can add up to big money over a year.
If you think that you only need life insurance if you have children then think again! If you are married and both have full time jobs, chances are there is an income disparity of some sort. Or perhaps one of you has vastly greater health benefits over the other one. If something should happen to the person with the better benefits, or the significantly higher income, then making ends meet could become considerably more difficult. For instance, I make 4x my wife’s salary, and while we live below our means we do live above my wife’s salary. That just goes to show that if we didn’t have life insurance she would have to sell our house and liquidate assets just to pay the bills.