Life Insurance and the Stay At Home Spouse

Life Insurance and the Stay At Home Spouse

A couple of years ago, I realized that I am not allowed to die.  Seriously.  Heaven forbid (not that I’m presuming I’ve earned my place beyond the pearly whites yet), something were to happen to me, I don’t think my spouse would be able to go on.  Not in the completely inconsolable way (which he would be, I mean, I’m worth missing), but in the “where do the forks go” sense of going on.  We’ve been married 8 years, and to this day, this preeminent military professional doesn’t know where we keep the toilet paper.

So, back to the whole not dying thing…

I’m a stay at home spouse.  I have two kiddos and dog.  I manage all the finances.  I cook.  I clean.  I plan vacations.  I keep in contact with our extended family.  I oversee car maintenance.  I comb hair.  I run household inventory.  I plan vacations.  I assist with homework.  Yada, yada…you get the picture.  I run our life.  If you had to put a dollar value on what you do as a stay at home spouse, what would it be?

According to Salary.com’s Mom Salary Wizard, my contributions are valued at $108,967 per year.  (Do you hear the bacon sizzling?  That’s right you do, because I’m buying it and cooking it!)  If I were to kick the proverbial bucket, I realized that I what I contribute to our family unit is vital and needs to be accounted for.  I needed to make sure that I had enough life insurance to protect my family in the event of my death.

 

What is FGLI?

Family Group Life Insurance (FGLI) is part of Servicemembers’ Group Life Insurance (SGLI), and is a benefit provided to active duty servicemembers and their families.  SGLI coverage is typically $400,000 for the active duty member and FGLI coverage for spouses is typically $100,000 (unless otherwise elected by the servicemember).  FGLI also provides coverage for dependent children at $10,000 each.  The current premium for SGLI is $27 and FGLI is an additional $6.

 

How much life insurance do I need?  Isn’t FGLI enough?

It depends.  As your life cycles in and out of different phases, your need for life insurance changes as well.  Typically, when you’re young, single, and have yet to purchase a house, your insurance needs will be much less than a person who has a spouse, mortgage, and children living at home.  In the most basic terms, you want your insurance to cover your debt obligations and cost of memorializing you.  So, add up your liabilities (debts), estimate about $20K for end of life stuff (really, I know you don’t want to think about this, but neither does your family), and if you will leave behind a spouse or kids, figure out how much you financially need to provide to help support them in your absence (not forever, but long enough to provide a cushion to get them back on their feet).

As a stay at home mom spouse, the most significant thing to consider is the cost of childcare.   You may also want to include additional padding for housekeeping among other things.  In our household, I do the cooking, so I imagine that in my absence, there would be a greater expense on restaurants.  I know this isn’t pleasant to think about, but this is one of the most thoughtful things you can do to protect and care for your family.

To make life easier and to take the guesswork out of determining how much life insurance you need, there are plenty of financial calculators available online to help you plan.

 

Term Life versus Whole Life

SGLI and FGLI are classified as term life insurance.  Term life insurance is life insurance that is good for a predetermined length of time (5, 10, 15, 20 years, or duration of your employment with a particular organization) and is temporary.  Meaning, once the term is up, the coverage ends.  Often, you will have the option to increase or extend the life of your policy.  One perk about term life, is that the premiums are less costly than whole life policies.  On the other hand, whole life insurance (also known as permanent life insurance) offers a lifetime death benefit and builds cash value over time.  The premiums are significantly higher than term life, especially at younger ages.

 

Where to go from here?

Ensuring that you are adequately insured is extremely important to your overall financial well being.  As stay at home spouses, we have a tendency to overlook our value and place in the household.  We may not be the main source of income, but we are the keepers of the hearth and cannot minimize our contributions to the success of our family unit.

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  1. [...] So your savings are in check.  How about your insurance?  Are you adequately covered?  Life insurance planning is a bit tricky and everybody’s got an opinion on it.  I personally prefer the lower cost of a term life policy; I’d rather do my investing myself through mutual funds.  Term life policies are much more affordable for the younger set.  I’m 30, and we pay $14.96/month for a 20 year/$250K policy.  The younger you nab your policy, the easier it is to be insured and the cheaper it is to stay insured.  If you’re going to buy a house, you definitely want to ensure that you’re covered.  Military families enjoy the benefit of SGLI and FGLI, you can read more about these by checking out my post on military spouses and insurance. [...]

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