Should I go back to school? Homeschool my children? Live off base at our next PCS?
The Answer: What’s the real value of all the things you do for your family each year?
Both Investopedia and Mint.com independently calculate the value of basic “Family CEO” services—child care, housekeeping, food shopping, laundry services, playing chauffeur and fulfilling the role of family chef—at around $96,000 per annum. By the way, that figure doesn’t include pet care, day care, tutoring, and any income you’re contributing to family finances. More than one-third of 524,000 military spouses living in the U.S. who are not in the military themselves, also work outside the home, according to a White House Report from the Council of Economic Advisors.
It begs the question; how would your service member be able to replace or handle all these responsibilities if something happens to you?
FSGLI—Does It Go Far Enough?
Most military families expect to rely on their FSGLI—Family Servicemembers’ Group Life Insurance. Spouses can easily get affordable and cost-effective coverage up to $100,000, provided their insurance doesn’t exceed the servicemember’s coverage. It’s a great program to cover the immediate need.
Did you know, though, FSGLI ends shortly after a servicemember leaves active duty, separates, gets divorced, or discharged? After that, finding life insurance coverage for a spouse, without the protective umbrella of military service, becomes a more expensive proposition.
Military families can prepare for both the unexpected, and the expected—by that I mean the day when your service member leaves military service. Once you have carefully measured the financial value of your total contribution to your family, you will want that amount of coverage to take with you into the civilian world.
Will You Do What Smart Spouses Do?
I’ll admit it. Life insurance is not only unexciting, it also feels confusing and a bit overwhelming. But it doesn’t have to be. Answer three questions for yourself, and you will know what to do:
Who should benefit from your insurance policy?
Most military families buy spousal insurance to be sure their children are well-cared for. With FSGLI, the surviving servicemember, who assumes sole responsibility for raising the children, is always the beneficiary. The insurance benefit helps provide the means to purchase helping hands when they’re needed.
Unlike FSGLI, other military-focused insurance providers don’t limit the payout amount to $100,000 or restrict who you can name as your beneficiary. Buying a small supplemental policy that covers the first two or three years until the family can get re-adjusted, won’t break the bank.
You might be surprised to learn that for as little as $2.50 per month, Military Benefit Association sells $50,000 of term coverage. For less than the price of one specialty cup of coffee each month, you can be sure your child would inherit the means to travel, take piano lessons or pay some school tuition when the time comes. What’s more you will never have to worry about losing coverage or your insurance getting cancelled when your spouse is no longer in service.
What kind of insurance should I get?
Whole Life, Universal Life, Variable Life Insurance…put all those terms aside unless you are looking for insurance as part of a long-term, strategic investment.
Term insurance is the right solution to a relatively short-term need. It gives the most coverage at the least cost for a fixed period of time and is easy to start. Often you can complete the entire transaction online. Most people, not just military families, want coverage while their children are still dependent on them. Professionals note that once kids are no longer dependent on their parents, there is little need to pay for life insurance, unless there are already large, on-going financial obligations.[1]
How much term insurance do I need?
Tally up all the expenses your loved ones will face—some Family CEO services, child care that must be paid for, plus any outstanding personal debts you still may have such as school tuition loans. Now add $10,000 for final expenses. If your family also depends on your income to balance the monthly budget you probably will want to add in an amount covering the rest of the year.
From that total subtract your own personal savings/investments and any FSGLI life insurance benefits. The net amount is a good estimate of what you need in term life coverage. The cost of term life insurance is relatively inexpensive and a decision a family can comfortably make; but if you have any doubts, you always have the option to seek assistance from a financial advisor.
That’s all there is to it. Why not do what most smart spouses do? Recognize your family may need insurance, determine how much, make the decision to get covered, then go online and sign up today.
[1] https://www.thesimpledollar.com/insurance/life/when-should-you-stop-paying-for-life-insurance/
https://www.nerdwallet.com/blog/insurance/how-long-term-life-insurance-policy-should-last/
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