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Ask Dave

How Much Life Insurance Does Mom Need?

Susan doesn't know how much life insurance money a family should have on a stay-at-home mom. How much?

QUESTION: Susan asks Dave to explain how much life insurance should be on a stay-at-home-mom.

ANSWER: I don’t know that there’s a calculation. When I was broke, we put $200,000 on my wife Sharon. When we had some more money, we put $400,000. If something happens to my wife, I have to hire someone to take care of the children. I can hire a nanny for $40,000 a year, and I get that number from the 10% yield that will come from investing $400,000 in life insurance money if something happened to Sharon.