As we prepare to celebrate Valentine’s Day, it may be a good time to consider giving the ultimate gift to a loved one – the gift of security in the event of our death.
This is particularly true for those of us with stay-at-home spouses.
Stay-at-home spouses are invaluable to many families.
Homemakers provide childcare, look after the home, prepare meals and engage in many other time-consuming activities such as shopping for groceries.
If you have a spouse who is a homemaker and you die, how would he or she provide those services after rejoining the workforce?
Although relatives and friends may assist with money and time during the first few weeks after your death, eventually they will need to return to their regular lives, leaving your spouse on his or her own.
Clearly, beyond the obvious emotional repercussions of such a tragic loss, there would also be a significant financial impact.
There are no hard and fast rules for determining how much life insurance is enough, because no two families have the same needs.
In general, though, you might want to consider insurance protection that is equal to your annual salary times the number of years before your youngest child is out of college.
So, for example, if you earn $50,000 a year, and your youngest child will finish college in 15 years, the appropriate amount of insurance protection would be approximately $750,000.
Those numbers, of course, depend on your individual needs and resources.
Your calculation should also factor in other expenses you may want covered by your life insurance policy, such as funeral costs, probate fees, estate taxes and inflation.
A financial adviser can help you determine how much life insurance is suitable for you.