Well after a death in my extended family this week, our second baby on the way in early May and the renewal notice of my life insurance policy I’ve revised our life insurance needs to $500,000 each for me and my wife.
Why the $500,000? My math goes something like this:
- Pay off remaining mortgage $142,000
- Stay at home with kids age 0 to 12, $24,000/year x 12 = $288,000
- Kid related expenses ages 13 to 18, $10,000/year x 6 = $60,000
Total is $490,000. So I round up to $500,000. I expect government benefits will fund the kids RESP’s plans. Additionally that fact either my wife or I can continue some part time stay at home business will provide any extra income for vacations or anything else while the kids are small.
I don’t feel insurance should make the remaining spouse a millionaire, but rather give them what they need to finish raising the children. So how much insurance do you have and why that amount?