Pat and Kelly, new parents, made a couple monthly budget adjustments upon the arrival of their first child. First, due to the added cost of day care and dependent health insurance, they decreased the amount they were saving for a house. And second, they agreed to review their life insurance needs. Pat’s sister suggested they buy $500,000 life insurance policies like she and her husband did when their child was born.
Given the disparity in their incomes, Pat and Kelly were not convinced they each needed another $500,000 of life insurance.
Here’s what they learned from talking to their agent.
In two income households where one income is significantly more than the other, the cash and income needs for the surviving spouse will vary.
Their agent explained the three primary areas for concern are the: