Life Insurance: What Does Your Family Need?
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2. Shop around. Be glad you live in the age of the Internet, when there are online tools that allow you to see quotes from about 12 different companies at once: accuquote.com or netquote.com. But don't just look at price: assess the financial health of the carriers so that you can be confident that they'll pay up in the event of a claim way down the road. You can do this by using consumer reports or by checking their ratings (given by analysts like A.M. Best at ambest.com).
3. Determine how much coverage you need. One rule of thumb is 7-10 times your income. Take into account your various expenses, debts, and any government benefits your family would receive in the event of a loss. Don't forget that stay-at-home moms or dads should also be insured. They contribute to the family budget in the form of childcare costs avoided, etc.
At Kiplinger.com, you can input your income and expenses into an Insurance Calculator to help you assess how much coverage you should have. For single parents, having adequate life insurance cover is especially crucial. In her book Head of Household, Kara Stefan points out that single parents may have to pay for additional coverage as they have no income-earning partner to care for their kids once they're gone, and the insurance money will be used to help raise them.
Once you've finished this lengthy process and your insurance policy is in effect, don't forget to talk to your beneficiary about it. Whether it's your partner, a friend, or relative who would become your children's guardian and manage their funds if they were minors, make sure that person knows what type of coverage you have, what the amount of coverage is, and where your documentation can be found.
Then go out, treat yourself to a raw beet-and-kale juice smoothie, and remind yourself that life expectancy is on the rise.
Kirsten Denker is a freelance writer and mother of two living in Park Slope, Brooklyn.
