Mom Died No Life Insurance-Homeschool Mom

Mom Died No Life Insurance
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Mom Died No Life Insurance-Homeschool Mom

Mom Died No Life Insurance, If you have decided to take the plunge and join the homeschool movement, it is essential to make sure you maintain adequate life insurance during the stay at home parent. Although you may not realize a loss in income, due to premature death, consider the following questions that would suddenly arise.

  1. Who will care for your children when you are working?
  2. Who will continue to tutor your children at home? Will they be forced back into public or private schools?
  3. Who will provide transportation services for extracurricular activities?
  4. What would the cost of house cleaning, cooking, or laundry services be?

Mom Died No Life Insurance

A study completed in 2008 by SCIENCE DAILY, found Kids who had a father or mother who died abruptly have three times the chance of depression than those with two existing parents, along with a growing risk for post-traumatic stress disorder (PTSD).

Along with the expenses above, the psychological adjustment period (especially if your children are young) could be several months or more causing a loss of income for the working parent.
It is best to have a professional insurance agent or planner assist with your calculation. But if you enjoy math problems, there are a couple of ways to calculate your insurance need.

Mom Died No Life Insurance-Method one, the Capital Needs Method:

The benefit amount, when invested at 5%, would provide the amount of income (capital) needed to maintain your lifestyle without touching the principle.

Example: To provide $50,000 per year, divide $50,000/5%. (5% is the estimated conservative investment return) This will equal $1,000,000. You can then add the amount needed to pay off any additional debt or provide for college expenses without affecting the income earned on the invested lump sum.

Take care that you do not rush off and put all your money into one financial product such as an annuity, one mutual fund or ETF, or a real bond portfolio. These commercial products would be the time to seek the advice of a fee based or fee only investment adviser. Be careful of commissioned salespeople who call themselves advisors. These people need to be appropriately licensed to give information, and you can tell by the disclosure on their business card and literature. Ask how your advisor makes his money.

Mom Died No Life Insurance

There is nothing wrong with buying commissioned products, but some A share Mutual Funds can cost you up to 5 3/4% up front, and many Non-publicly traded REITs could cost you 7% of your initial investment before you have made a dime. If the product is a non-registered investment such as a promissory note, equipment lease, or viatical settlement -run as fast as your legs can take you or be prepared to say goodbye to your entire investment.

Variable annuities are also a costly way to diversify your investments. The guarantees may sound good, but they come with a hefty expense load built into the product. The more guarantees you have, the higher the fees. In some cases, we have seen variable annuities with annual payments more than 4.75-5%. That is hard to overcome when the market is not raging upwards fast enough to cover this cost. Also, all deferred annuities have a 10% tax penalty for withdrawals if you are under the age of 59 A unless you invoke rule 72t, ask your CPA about this one.

Again, most financial products have their place, but make sure you ask a lot of questions and understand how fluid your investment will is going after you invest. Many products come with surrender charges or are entirely non-liquid.
The other method is to add up all your debt, decide how long you will need additional income based on the age of the youngest child, or a term you choose and add it all together. Again, everyone's case is different, and a rule of thumb should not be used for such an important decision any more than taking off for California on a road trip by going West or South.

Mom Died No Life Insurance

Here is a list of other things to consider.

  • Total Debt including mortgage, credit cards
  • College expenses (include inflation calculation)
  • Retirement account funding
  • Cost to stay at home with your minor children during the adjustment period (6 months X your monthly net income)

The cost to replace above noted services provided for free until your youngest child is 14 to 16 years old.

You may be able to see now why Americans, for the most part, are so underinsured. When you add up the cost, a $100,000 policy from work would only pay for about 1-2 years of expenses before you were forced to get a second job, cut back homeschool activities or sell your home (if you own one).
Please don't put this vital decision off.

Mom Died No Life Insurance Summary

Although life insurance cannot replace your spouse, it can certainly make the transition a lot smoother and less emotionally stressful. Adequate term insurance is inexpensive and costs less than a monthly cell phone bill. Consider seeing your trusted insurance advisor as soon as possible. Remember to be cautious.