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Should parents have life insurance? If so, how much is enough?
Most parents would benefit from life insurance. But if you buy, choose very carefully.
Life insurance should serve only one purpose – to reimburse survivors for the value created by the person who died. Pay attention to my use of the word “should” because many insurance companies market ancillary benefits of questionable value. Term insurance makes the most sense, but insurers would rather sell you whole life, universal life, variable life, or other more expensive policies with investment vehicles built in.
Entire books have been written on this subject, and I won’t reinvent the wheel. I will, however, explain why you should stick to term insurance, then address how much you should purchase.
You can obtain insurance that grows in value over time or pays dividends. But if your goal is growth of principal or the creation of income, you can do that more effectively with stocks or bonds. Insurance with an investment component will almost certainly generate lower returns that other types of investments, in part because insurance companies layer on a lot of fees.
The insurance business teems with scams, but term life insurance is both simple and rational. You pay $XX per month, and if you die, your beneficiary receives $XXX,000. No investment component, just a death benefit. When you stick to term insurance, you can save a lot of money. A healthy nonsmoker in his early 40s should be able to obtain $500,000 of coverage for less than $35 per month. That’s not much to pay for peace of mind.
Because term insurance is cheap, I would advise just about every parent to purchase some. Unless you are wealthy enough that your child’s lifestyle would not change in the event of your death, owning life insurance makes sense.
Many people just buy policies of $25,000 or so to cover funeral expenses. But life insurance is best used to help your spouse cope with living expenses after your death. For breadwinners, I advise insurance equal to eight or 10 years of income. If you support a child making $50,000 per year, your spouse would probably have financial trouble if you died tomorrow. Stay-at-home parents often have to go to work, working parents find themselves drowning in the costs of a lifestyle that requires two incomes. A $500,000 death benefit, if invested wisely, could either cover several years of household expenses or enable the surviving parent to work only part time rather than full time for as long as the children are living at home.
Stay-at-home spouses probably don’t need as large a policy as the breadwinner, but they should be careful not to undervalue their contribution. My wife and I purchased a life-insurance policy on her years before she went back to work – in fact, she insisted on it, because she knew that her loss would leave me with some very difficult choices to make.
Recent studies regarding the market value of a housewife’s work suffer from inaccurate social assumptions and bad math. But reality suggests that if a caregiver dies, either the children will end up in day care, or the breadwinner will have to spend a lot more time at home. Both changes can be stressful, and life insurance can provide flexibility.
My 2-year-old daughter ate an apple. I mean she ate all of it, including the seeds and most of the core. Should I be worried?
No, don’t worry. Human bodies – even young ones – are equipped to digest the occasional seed and the fibrous material that makes up the core. And whatever portions of the apple do not digest should eventually pass.
Apple seeds do contain harmful chemicals, particularly a type of cyanide. But the dosages are very small, and unless your little girl ate a cupful of seeds, there should be no danger. In addition, the U.S. Department of Health and Human Services says the seeds are not toxic unless crushed before ingestion.
If you’re worried, just remember that people have been eating apples – including the seeds – for centuries, with no known side effects. If apple seeds consumed in small quantities were dangerous, we would know by now.
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