This is a subject worthy of revisiting. Men especially, but women also, underestimate the need for life insurance in almost all scenarios. Even when there should be no other assumption than exactly equal we somehow manage to come up with the wrong answer.

If we say for for simplification sake that a husband makes $50,000 a year and they have determined that the correct amount of life insurance is 10 x his annual income, he needs to carry $500,000. If his wife makes $50,000 they should use the same formula and come to the same result, but all too often her contribution to the family income is discounted and they assume they don’t need as much life insurance on her.

For that reason I will be looking at life insurance, it’s need and it’s impact, for women in various roles. Let me be very clear that I have no bias that leads me to believe one role is better for a woman than another. I would hope for all women that the path they choose is fulfilling.

I live in a two income household. Our children are grown. While I have done well with my insurance business, my wife has done equally well as a business owner of multiple Curves franchises. Before that she was a nurse and brought in substantial income. She is an integral player in our life budget and our plans for the future. If she died prematurely with no or inadequate life insurance, my ability to continue on would be damaged. She has already been through a premature death of her first husband and fully understands the economic hardship that happens when a household goes from two incomes down to one.

Having life insurance is all about whoever is left behind having choices. In most cases, with little or no insurance, all of the choices would be steps backwards. I might have to sell our house and downsize. If I sold the house, since my office is on the same property, it would affect my business. I might have to liquidate assets to make up for the lost income. My lifestyle would have to change since we always combine income for things like vacations.

If the process of figuring out how much life insurance is adequate for a man works, the same process should be followed for women. Don’t get trapped into old ways of looking at the subject. A rule of thumb when I first started in the business was that a wife should have about half as much insurance as the husband. While that rule of thumb was left behind some time ago, in a way it still lingers. Men, on average, carry almost exactly twice as much life insurance as women.

Our wives face the same perilous path through life that we husbands do. While statistically they will outlive us, we never know when they will fall victim to one of the leading causes of death for women today.

Bottom line. In almost all two income households, the loss of one of the incomes is huge. Each income should be analyzed not just by it’s monetary size, but also for what it accomplishes. I think we probably all know couples where, for instance, the husband makes $50,000 and the wife makes $30,000, but more of the bills are paid from the wife’s income and more money is blown from the husband’s income. In a situation like that, the loss of her income might very well be more damaging than the loss of his income.

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