Does a stay at home mom need term life insurance?
The way to think about this is: what would happen to the family if stay-at-home Mom were to die. You obviously can't do anything about the loss, grief and trauma, but think about the financial implications. Assuming that Dad continues to work, and that the child is young, you are going to have to find someone to take care of him/her. If you have relatives willing to step in, that may be fine. but if not you will have to pay for daycare - an expense you don't now have. That's going to get less as the child goes to school, but not go away until he/she is old enough to look after themselves. Bringing up a child, as well as working a full time job, is pretty demanding. You may find that you don't have as much time for cleaning the house, cooking or other chores. Having a sum of money which can be used to hire help or pay for a few meals out can be very useful in these cases. Here is an article which places a value on the work done by a stay-at-home Mom. You might not need to pay for all of those services, but it gives you an idea of what the extra expenses might be.  Think about what extra money you might need to spend, and arrange for life insurance to cover it. Absolutely!  Just because a spouse doesn't have a taxable income, doesn't mean they aren't providing real, tangible benefit to the family economy with an important job. As tragic as it is to consider losing your spouse, are you truly in a position to replace everything they do you for you?  Knowing what they do for you and appreciating the effort your spouse gives is important, but don't sell short the dollar amount of what they provide.  Your life insurance policy should be to keep you whole. Without your spouse, you will need childcare.  You might need domestic services to the home.  What about a nanny or similar service?  Would $50K cover that until your child is an adult?  There are a number of added expenses in the short and long term that would occur if a spouse died.  How much for a funeral? Obviously you know the amount and term depends on the age of your kid.  But I think you should really try to account for the number of daily hours you spouse puts in, and try to attach a cost to those hours.  Then buy insurance for them just as you would for a wage earning.   For example, buy a policy that is 10x the annual cost for services it would take to compensate for your spouse.  Your tolerance for risk and cost can adjust it up and down from there. We asked the same question earlier this year as my wife is a SAHM with 2 young boys (5 and under). If something happened to her I'd have to quit work or change careers to stay home to raise them or something. We ended up getting a decent 20 year level TERM policy that will cover the care of both boys for many of their younger years. The cost is negligible but the piece of mind is priceless. Another source of insurance can be through the working spouses employment. Some companies do provide free or low cost coverage for spouses without a need for a physical exam. The risk is that it might not be available at the amount you want, and that if the main spouse switches companies it might not be available with the new employer. A plus is that if there is a cost it is only a one year commitment. Term insurance is the way to go. It is simple to purchase, and not complex to understand. Sizing is key. You may need to provide some level of coverage until the youngest child is in high school or college. Of course the youngest child might not have been born yet. The longer the term, the higher the cost to account for the inflation during the period of the insurance. If the term expires, but the need still exists, it is possible to get another policy but the cost of the new term policy will be higher because the insured is older. If there are special needs children involved the amount and length may need to be increased due to the increased costs and duration of need.   Don't forget to periodically review the insurance situation to make sure your need haven't changed so much a new level of insurance would be needed.
"First, I'm really sorry to hear about your mother. My wife was recently diagnosed with Stage 4 cancer, so I know that there is a possibility that your mind is in ""survival"" mode, trying to preserve as much as you can in the way of things that you can effect (that's how I've been feeling recently). Having a loved one with cancer is really tough because there is absolutely, positively nothing tangible that you can do to change the fact that they have cancer. You will have to ask yourself some questions: How important is it that your mom can stay in her house? Moving could add some unneeded stress. How may years have you been contributing to your 401k? If you have 30 years left, you could have enough time to recover some of your losses from reducing the amount of money you have given up for your mom. Will your mom be able to pay you back for paying the taxes over time, or would this be a 'gift'? Have her doctors told her that she ""... has N months left...""? What is the next step after you are able to pay her taxes and save the house?  Someone close to me recently told me that ""There is no point in trying to save for someone for the future, if you can't sustain them until they get to that future. What will happen to your mom if she loses her house? Will it make it easier or harder for her to recover if she can stay? To paraphrase someone famous, ""you can't take a loan out for your retirement, but you could take a loan out for this event."" At any rate, good luck. My thoughts are with you and your mother." "If I was in your shoes I would have some term insurance, and it is pretty darn cheap at your age.   Your wife is dependent upon your income, and it will take sometime to transition from non-working to working.  As she could probably get a job doing anything, it will probably take many years to build up to the lifestyle she is accustomed.  She may never be able to obtain your salary. While she could spend down the amount you two have saved up for retirement, tax will have to be paid on any non-ROTH contributions.  The decisions for this have to be made within a year of death and are not easy.  I would not want to put my spouse through this.   Plus some day she would have to retire.  If she spends down a significant portion of the savings you have built, well that will need to be replenished and you probably know time is not on one's side when it comes to compounding.   Do you have to have 10x-15x times your earnings in insurance?  No.  Do you need to do a 20 year level term, No.  Perhaps a 10 year level term for like 5x your income.  Just something to ""bridge the gap"".  If you live, you will be much better off financially, and could probably drop the coverage.  If you don't you will not leave her sad and with difficult financial decisions; just sad." At their age, the likely did not even need the coverage anymore unless they were doing some major estate planning.  If that's the case then it sound like they purchased the wrong policy to begin with since OP's account of the information makes it sound like a term policy.  If it is a term policy, the term was also probably about to end as well.    In the end, this will likely not be a bog deal. "I have an answer and a few comments. Back to the basics:  Insurance is purchased to provide protection in case of a loss. It sounds as though you are doing well, from a financial perspective. If you have $0 of financial obligations (loans, mortgages, credit cards, etc.) and you are comfortable with the amount that would be passed on to your heirs, then you DO NOT NEED LIFE INSURANCE. Life insurance is PROTECTION for your heirs so that they can pay off debts and pay for necessities, if you are the ""bread-winner"" and your assets won't be enough. That's all. Life insurance should never be viewed as an investment vehicle. Some policies allow you to invest in funds of your choosing, but the fees charged by the insurance company are usually high. Higher than you might find elsewhere. To answer your other question: I think NY Life is a great life insurance company. They are a mutual company, which is better in my opinion than a stock company because they are okay with holding extra capital. This means they are more likely to have the money to pay all of their claims in a specific period, which shows in their ratings: http://www.newyorklife.com/about/what-rating-agencies-say Whereas public companies will yield a lower return to their stock holders if they are just sitting on additional capital and not paying it back to their stock holders." Term life insurance makes sense if you will have a need for money if someone dies.  If you (and your brothers) do not have enough money currently for a proper burial for your father, then you might consider term insurance to cover this.  If you already have the money to cover this (or can save for it in a short amount of time), then you are better off financially to not purchase the insurance. Estimate what you think it will cost for a burial, then determine if you have this money available to you.  If you already do, then don't purchase the insurance. If you do not have this money available to you, then you can look into a term life insurance policy on your father.  You definitely do not want a whole life insurance policy.  This will cost many more times what a term policy costs.  A term policy is a policy with an expiration date. For example, let's say that you determine that you will need $10,000 when your father dies for the funeral and burial.  You could get a 10-year policy on your father for $10,000.  Over the next 10 years, besides paying your premiums, save up $10,000 ($1,000 each year) in some type of savings/investing account.  Hopefully, your father will still be around 10 years from now, and you won't need the insurance policy anymore, because you will have saved enough to cover the costs when the time comes.  Doing this will almost always cost you less than getting a whole life policy, which never expires, but has much higher premiums. There are also 20-year term policies, which will cost more, but will give you more time to save up your fund.  The costs for these policies depend on your father's age, so get a quote for both and decide what will work for you. I've had many home loans, and all have been sold to a big bank.  They have certain rules about how much insurance you need to have, but I've never had one buy insurance on my behalf - they always send letters telling me I need to increase the insurance.  They do say that if I don't get enough insurance, they will do it for me, but this has never been necessary. As Mhoran stated, no dependents, no need.  Even with dependants, insurance is to cover  those who would otherwise have a hardship. Once the kids are off to college and house paid for, the need drops dramatically.  There are some rather complex uses for insurance when estates are large but potentially illiquid. Clearly this doesn't apply to you. "This article has a section titled ""Do you need an umbrella policy to cover your personal liability risks?"" that says: If you have young children, for example, you might need a policy   because they have lots of friends. These little tikes might get into   some mischief and hurt themselves at your home. If so, you’re at risk   of being sued. Do you have people over often? Do you drive like a maniac or a   Parisian? Do you have firearms on your premises? Do you have gardeners   and housekeepers on the grounds? All these are reasons why you might   want to own an umbrella policy. Although many people in the US are homeowners, parents, drivers, etc., not everyone falls into these categories. For some people, as low as the premiums for such a policy might be,  the expected cost outweighs the expected benefit. The cost of a lawsuit may be extremely high, but someone may feel that the chance of a lawsuit being filed against them is low enough to be safely ignored and not worth insuring against. I'm probably not a great example, but I'll use my own situation anyway. Even though a liability policy probably wouldn't cost me too much, I'm almost certain that I wouldn't derive any benefit from it. I live alone without children (or firearms, pet tigers, gardeners, etc.) in a 520 sq. ft. apartment, so the probability that something bad would happen to someone on the small bit of property that I rent and that they would file a sizable lawsuit against me is small enough that I choose to ignore it." Higher life insurance.  Mortgage insurance is a very expensive decreasing term life insurance policy, that pays the Lender. You can likely increase your limits for less cost, AND, the payout doesn't depreciate every month, AND, your beneficiary can use the money any way they want - to buy food, or pay property taxes, or whatever. If the child can take over the life insurance when they wish to get a mortgage or have their own children, there may be a case for buying insurance for the child in the event that your child's health is not good enough for them to get cover at that time. However I don’t think this type of insurance is worth having. As you say life insurance is about covering the loss of income, so unless your child is an actor or musical prodigy or similar and already earning money, there is no income to cover, and in fact you would have less of a financial commitment without a child to provide for. The other angle is that child life insurance is cheap and they'll have lower premiums than an adult. I'll quote the referenced article directly to address that: Another ploy is that children's life insurance is cheap. It is inexpensive compared to adult life insurance because, plain and simply, children rarely die. While the numbers that the sales agent puts together may make children's life insurance sound like a great deal, take the time to run what you'd have if you instead invested the exact same amount used on the insurance fees into a Roth IRA and you'll find the true cost of purchasing this type of life insurance. For most people Term is the way to go. I consider life insurance a necessity not an investment. See this article on SmartMoney. "The problem above is actually a pretty good list of the concerns around life insurance.  While there is no correct answer to the question as posed, this will vary among different WSCs, there is a simpler way to think about insurance in general that may make finding what is right answer for you easier. Buying life insurance, like almost all insurance, is on average a money losing purchase.  This is simply because the companies selling wouldn't offer it if they couldn't expect to make money on it.  Think about buying insurance (a warranty) on a new cell phone, maybe if you are particularly prone to damaging cell phones it can be in your favor, but for most of the people that buy it will lose money on average. People, of course, still buy insurance anyway to protect themselves from unlikely but very bad consequences.  The big reason to make this trade off is if the loss will have big lasting consequences.  To stay with our cell phone example having to replace a cell phone, at least for me, would be annoying but not a catastrophic event.  For myself, the protection is not worth the warranty cost, but that is not true for everyone. Life insurance is a pretty extreme case of this, but I find the best question to ask is ""if you (you and your spouse) were to die will your dependents lives become so much worse that you really dislike the idea of not being insured?"" For some working seniors, they already have enough saved to bridge their kids/spouse to adulthood/old-age that insurance makes no sense.  For some, their children/husband/wife would be destitute and insurance is an obvious choice and an easy price to pay even if it is very high.  The example you suggest seems on the border and good questions to ask are: Thinking about those questions may help you understand if the protection offers is worth the cost." (Disclosure - I am a real estate agent, involved with houses to buy/sell, but much activity in rentals) I got a call from a man and his wife looking for an apartment. He introduced itself, described what they were looking for, and then suggested I google his name. He said I'd find that a few weeks back, his house burned to the ground and he had no insurance. He didn't have enough savings to rebuild, and besides needing an apartment, had a building lot to sell.  Insurance against theft may not be at the top of your list. Don't keep any cash, and keep your possessions to a minimum. But a house needs insurance for a bank to give you a mortgage. Once paid off, you have no legal obligation, but are playing a dangerous game. You are right, it's an odds game. If the cost of insurance is .5% the house value and the chance of it burning down is 1 in 300 (I made this up) you are simply betting it won't be yours that burns down.  Given that for most people, a paid off house is their largest asset, more value that all other savings combined, it's a risk most would prefer not to take.  Life insurance is a different matter. A person with no dependents has no need for insurance. For those who are married (or have a loved one), or for parents, insurance is intended to help survivors bridge the gap for that lost income. The 10-20 times income value for insurance is just a recommendation, whose need fades away as one approaches independence. I don't believe in insurance as an investment vehicle, so this answer is talking strictly term. Bond ETFs are traded like normal stock.  It just so happens to be that the underlying fund (for which you own shares) is invested in bonds.  Such funds will typically own many bonds and have them laddered so that they are constantly maturing.  Such funds may also trade bonds on the OTC market. Note that with bond ETFs you're able to lose money as well as gain depending on the situation with the bond market.  The issuer of the bond does not need to default in order for this to happen.  The value of a bond (and thus the value of the bond fund which holds the bonds) is, much like a stock, determined based on factors like supply/demand, interest rates, credit ratings, news, etc.