How to Buy Life Insurance for Your Wife

The premature death of a wife and mother can have a severe financial impact on a family.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Calculators
• Life Insurance

1. Contact your employee benefits office to determine your eligibility for dependent group life insurance and find out how much you can purchase on your wife.

2. Ask your wife, if she is employed, to find out through her employee benefits office if she has employer-sponsored group life insurance, how much coverage she currently has, and how much additional group life insurance she can buy.

3. Inventory all other available sources of group life insurance for which you or your wife might be eligible, including the Veterans Administration, professional organizations, and fraternal orders.

4. Assign an approximate dollar amount for child care, rounding up to the nearest thousand.

5. Determine the number of years it will take for your youngest child to finish a four-year college education.

6. Multiply those years by the gross annual income your wife now produces, rounded up to the nearest thousand dollars.

7. Sum those two dollar amounts to calculate the insurance need.

8. Add up the total amount of group life insurance currently in force on your wife, and then add any additional amount for which you might qualify.

9. Sign up for group life insurance during the next open-enrollment period to meet the calculated insurance need.

10. Apply for term insurance to make up any significant difference between group coverage and the calculated insurance need.

Tips & Warnings

• If there is no adverse financial impact to you or your family in the event of your wife's premature death, don't buy life insurance for her.
• Consider all factors specific to your particular situation that might reduce the costs above, such as extended family support and inheritances.
• Group life is cheap. Buy as much as you can up to the insurance need.
• Ask the provider(s) of any group coverage for a "certificate of insurance" (they do not issue "policies") for your records.
• If you need term insurance, quotes are available online.
• Consider a level-premium term for needs longer than five years.
• Review your wife's coverage annually or when your family needs change.
• As insurance needs decrease, reduce coverage annually, starting with any individually owned term insurance.
• Term insurance has no cash value.
• Permanent insurance has a cash value, but is many times more expensive than term and ties up money that probably could be put to better use for a young family.
• Don't buy more insurance than is necessary. The total face amount of insurance you have on your wife is to cover economic necessities, not reflect your love for her in dollars.
• Don't buy less insurance than necessary in an effort to buy a permanent insurance policy within your budget. Cover the need.
• Smokers cost more to insure than non-smokers.
• Don't buy more insurance on yourself than necessary just to get coverage for your wife through a "spousal rider."
• Be truthful with any insurance application. Fraudulent statements can result in partial or total loss of benefits.

[DDangzalan]

on 12/22/2008 I agree with JRIngrisano. The points above are valid, however, overlooking the importance of estate planning inclding tax issues, final expenses, final debts (including medical bills) and other problems left behind for surviving adult children when elder parents pass away without adequate life insurance. Only a reputable agent working with your estate planning lawyer can create an adequate plan to cover these issues.

We tend to think about young families as the primary market for life insurance, and although this is an important consideration, with people living longer and outliving their retirement savings, having adequate life insurance in your "Golden" years is equally as valid as the needs of a younger family.

One of the biggest issues I face as a life agent is people "outliving" their term insurance policies. The worst case I've ever seen was an elderly woman who was barely su

[Hadley]

on 4/21/2008 Yes, an agent can do the work for you, but before you meet with an agent,

1. Use a life insurance calculator to find out how much coverage you may need.

2. Compare free life insurance quotes online to get an understanding of how much life insurance costs.

That way you will have some helpful information to review before meeting with an agent.

[JRIngrisano]

on 12/15/2007 This is a lot of work. A better way -- this from a guy who has spent 35 years writing about life insurnce -- is to track down a reputable life insurance agent. The agent will do all the work at no charge. (And, no, I do not work for any specific insurance company.)