How Much Life Insurance Does Your Family Need?

When I worked as a TV news reporter, I covered an array of stories where people lost their lives. Car accidents, murders, house fires and Hurricane Katrina were among the hardest stories about loss.

Loved ones were left to recover emotionally from their loss. Then they had to figure out how to cover unexpected funeral expenses. In our newscasts, wee shared stories about grieving families seeking donations and holding fundraisers because they couldn’t afford burial on their own. It was a sad reminder that everyone, even babies and children, need life insurance.

Throughout my childhood, college and graduate school, my parents covered my life insurance.

But shortly after I had A.J., I realized I needed to invest in additional life insurance. Not only for my funeral expenses but to handle a huge expense – childcare. Since I work from home, I’m also A.J.’s primary caretaker and if something suddenly happened to me my husband would have to hire a full-time nanny to care for him.

As morbid as it is to think about, A.J.’s got life a insurance policy too. Because he’s so young, his premium is less than $10 a month. I can increase the value of the policy and choose to use it for his college expenses when the time comes. My husband pays for his life insurance through his employer. His loss of income would be a huge hit for us since he’s the breadwinner in our family. Thankfully, we’re covered pretty well.

But so many families don’t want to think about death or funerals so they don’t see the value in life insurance. Then they leave behind grief-stricken relatives who often end up in debt because they had to cover unexpected funeral expenses and loss of income among other things.

I’ve heard people assume the death benefits from the Social Security Administration (SSA) would be enough to cover what they’d need to bury a loved one. But I can tell you from my family’s recent experience with losing my Father that’s not the case. The SSA benefit is rarely more than a few hundred dollars.

Have you considered how much life insurance you need?

Did you take into account how your family will handle your debts, funeral expenses and your loss of income?

Disclosure: This post is presented by Genworth Financial 

where you can learn more about mortgages and planning ahead for your family’s future. 

All thoughts & opinions are 100% my own.

About Joyce Brewer

Creator & Host of Mommy Talk Show. Emmy award-winning TV journalist.Wife & Mommy; Mom Blogger; Social Media Coach; Long Island, New York transplant living in Atlanta, GA. Follow Joyce on Twitter @MommyTalkShow Author of Use What You Know: A Business Idea Guide for Moms featuring interviews with mompreneurs who created businesses using their skills & backgrounds.

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  1. Joyce, my mom recently passed away and I had to do the same type of assessment for my daughter. I did get a policy for me, but thanks for the reminder that I really need one for her, too. Not going to think of the horror of needing it, just the prudence of making sure everything is covered. Sorry about your dad.

    • I’m sorry about your mom.
      Please get a policy for your daughter. Think of it as a college saving plan if that makes you feel better.
      But it’s needed.

  2. Not pleasant to think about, but very necessary. Here’s an easy tip to calculate how much you’ll need, especially for the primary breadwinners: 20 times the annual income you need to replace. You should be able to achieve a 5% annual return so 20 times allows you to replace the income without drawing on the principal.

    You’ll also want to make sure you have a policy of your own, rather than an employer sponsored plan. When you leave your employer, you often leave behind the plan. Check to make sure the coverage is portable before relying solely on that coverage. The older you get the more likely it is you will have high rates or even be declared uninsurable for health reasons.

    It’s also a good idea to check with a financial advisor about the tax consequences of an employer sponsored plan. My employer pays my premiums so any distribution to my family would be taxable income.

    Different employers offer different plans so check to make sure you really are getting the coverage you need. For example, my employer doesn’t offer a whole life benefit. Benefits are only payable on death so we couldn’t use any portion of my daughter’s policy towards her college tuition.

    Tough conversations to have, but thanks Joyce for reminding us we need to have them!

  3. It’s scary to think about, but irresponsible NOT to think about. As parents, we have to plan for the best AND worst in order to protect our children.

    • @Lindsay: I think people just think money will fall out of the sky when it’s time to bury a loved one or even a child.