Do my spouse and child need life insurance?

A dying Father called his Sons to his bedside in order to give counsel. He said: “There is a great treasure hidden in one of the vineyards.” Shortly after that he died. The Sons, upon his death, took up implements and carefully dug over every part of the land. They found no material treasure, but the vines yielded an extraordinary crop because of the care.

Wouldn’t it be amazing if you could leave behind a treasure that your family could use to better their lives? Like some inheritance that you could entrust to them so they wouldn’t have to worry about where the next paycheck is going to come from? Much like the father in the story who left behind a legacy that could take care of his family for generations.

As a parent, or a spouse, or basically someone who has dependents, it is important to think about how the ones who depend on you and your income will survive if you’re gone. Leaving something substantial behind for them to support themselves should be a priority. Not all of us are fortunate enough to inherit everything we need. And most of us are still working our way to the top. So what happens to our family if we die unexpectedly today?

The answer to this problem is life insurance. To be more specific, term plans, the simplest and purest form of life insurance. It affords the family the chance to grieve and readjust to their new life circumstances. They are also cheaper than any other form of life insurance.

You may not be the only one contributing to your household. Your spouse, whether he or she has a job, or is a stay at home parent, is an active participant in the everyday life of your family. Therefore, it is also important to understand how you and your family would be affected if your spouse were to die.

What if my spouse works?

We need to look at life insurance as an added layer of income protection. So if your spouse is contributing to your household income, and the family is dependent on this income to provide for their future goals, then his or her income should be protected. The amount of insurance cover, in this case, can easily be calculated with the aid of a financial plan. You need to know, in monetary terms, how much of your family’s lifestyle and future goals will be affected if his or her income suddenly ceases.

It is also relatively easy to apply for life insurance if you have proof of income. Insurance companies base their decision on the amount of cover they are willing to provide as a multiple of the income you earn.

What if my spouse is a stay at home parent?

A spouse who stays at home, cooking, cleaning, taking care of the children, or even overlooking all of these tasks, is also actively contributing to your family’s sustenance. What happens to these tasks if he or she were to die unexpectedly? At the very least, you can consider the financial value of child care, house care, and other tasks or chores the spouse takes care of at present.

It is difficult to gauge their full contribution on monetary terms. Therefore, most insurance companies base this decision on the coverage and income of the earning spouse. Some companies also restrict the amount of cover the stay at home spouse can take irrespective of these conditions.

What about my children?

Life insurance is ideally not designed for children. Not unless there is a monetary loss to the household in case of their demise. While there may be exceptions to the rule, we believe life insurance should be used as a tool to ensure their protection. When we calculate how much cover a parent needs, the highest priority is given to the children whose future is dependent on their income.

Term plans can be taken only if you are above 18 years of age. But there are other types of life insurance, like child plans, which are designed to protect your children’s future goals. Even in these types of plans, it is always recommended for the parent to be one who is insured.

It may be argued that the loss of a child can have emotional repercussions which can prevent a parent from going to work or being fully functional. This can in turn lead to monetary losses. But the cost of insurance in such cases will be high, and not worth your money in the long run.

One can also argue that there are insurance policies that support the habit of investing along with providing protection. And if the idea is to invest for your child’s future, we believe there are much better alternatives than an insurance policy.

“You don’t buy life insurance because you are going to die, but because those you love are going to live.”

You can provide better protection to your family by ensuring that you and your spouse are adequately insured. The best way to do this is to sit down and have an honest discussion about what the loss of each other means to your future. It may not be the easiest of decisions, but it is a vital one. Every member of your family should feel secure and financially protected no matter what life throws at you. After all, peace of mind is critical to any happy relationship.