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Life and Health


By January 1, 2009No Comments

There is a serious misconception about not buying Life insurance for a stay-at-home spouse that is all too common. Many people feel that because a spouse doesn’t work outside the home, Life insurance is not necessary because there’s no salary to replace.

The problem with this thinking is that it fails to account for all the jobs a stay-at-home spouse performs during a typical day, one of the most important being childcare. All of those tasks would still need to be completed if the stay-at-home spouse passed away. Either the surviving spouse would have to quit his or her job, go part-time, or hire someone else to help out. If the stay-at-home spouse had Life insurance, the policy proceeds could be used to pay someone to tackle the household tasks and care for the children so that the remaining spouse could continue to work and support the family.

When you buy coverage for a stay-at-home spouse, you need to consider how long you would need help. If your children are infants or toddlers, then you’ve got many years of childcare before they can be left on their own. If they are teenagers you will need less help because the children are gone most of the day and they can also help out with household chores.

Until you do a needs analysis, you can’t really know for sure how much coverage the stay-at-home spouse should own. The best way to ensure you have accounted for all the ways your family depends on the stay-at-home spouse, is to talk with your insurance agent. They can help you determine how much coverage to purchase.

There are two basic types of Life policies. Permanent Life insurance provides life long protection as long as premiums are paid when due. This coverage also accumulates tax-deferred cash value. Such cash value can be borrowed against for education, to buy a home, and supplement your retirement income. Keep in mind that any unpaid loans made against the policy’s cash value accrue interest and reduce the policy’s death benefit if the insured should die before the loan is fully repaid.

Most permanent policies offer a fixed premium for the life of the policy. Other plans offer flexible premiums and benefits to suit your needs.

The other option is Term Life insurance. This coverage provides affordable protection for a specified number of years. Term policies are available ranging from 5 years to 30 years, many of which are annually renewable after the initial term period. Look for a term policy with a conversion privilege. This permits you to convert your term policy to a permanent policy without providing evidence of insurability.

Consumers often choose term policies because of large coverage needs and affordability is always a factor. However, a term policy is only in force for a specific time and once it expires, you lose the death benefit unless you renew. Renewal costs can be sky high on these policies.

Since there are many issues to consider with your family’s Life insurance needs, it is important to discuss your options with your insurance agent. That way, your family will be financially prepared if they lose the person upon whom they are so dependent.