An Expense You Can’t Skip If You Have Kids

How much would you pay to protect your family from a devastating financial blow? How about less than the cost of a soda from the vending machine at work? And yet according to a new survey featured in The Wall Street Journal, some 35 million households have no life insurance — up from 24 million in 2004, according to research firm Limra. That one in every three households.

One reason for the decline: Many employees lost the life insurance coverage provided by employers when they lost their jobs, or when companies decided to reduce benefit packages. But people without life insurance are treading on thin ice. Four in 10 households with children under 18 say they would immediately have trouble meeting expenses if the primary wage earner died; three in seven said they'd run into trouble in just a few months, according to the Limra survey. (Limra's research is funded by the insurance industry.)

Term life insurance is the simplest kind of insurance — you die, your family collects — and there's no excuse for anyone with children not to have at least some coverage. It's cheap: A healthy 35-year-old male can get $250,000 in coverage for as little as $13.50 per month with a company such as Genworth. That's 45 cents a day. Life insurance rates have fallen about 50 percent in the last decade, according to Accuquote.com. (Your best bet is to lock into a policy when you're young and healthy.)

The amount of life insurance you need is highly subjective. My own term policy would provide enough to pay off our mortgage, fund college for my three children and roughly replace my salary until the kids are out of college. (And it costs less than a latte a day.) How much insurance do you need? A few questions to consider:

-What is your current monthly household budget? What period of time do you want to cover 100 percent of those expenses to give your partner a chance to regroup, or, if they are out of the workforce, find a job?

-Would your family need to buy a health insurance policy? What would be the monthly cost? Are there other benefits you get at work that would need to be replaced?

-Do you want to provide enough to pay off the mortgage?

-Do you want to provide enough to cover four years of college tuition for your children?

-Do you want to provide enough to cover full-time child care if you don't have it already, so your survivor can continue to work or go back to work?

-Do you have revolving debts — credit cards, car loans — that need to be paid off?

-How much would your family receive in Social Security survivor's benefits? This amount can offset the policy amount.

Consider childrens' ages when you run the numbers, and include $10,000 to $15,000 for burial and final expenses. To get life insurance quotes, check out insure.com and accuquote.com.

Do you carry life insurance? What factors did you include when you calculated the policy amount? If you don't have it, why not?

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