Average family may need as much as $1.75 million in life insurance for each parent

Oct 07, 2011

A couple may need to have a lot of life insurance if they have children.

Anthony Petsis, a financial adviser from Philadelphia, said couples without children should have about $1 million in life insurance between them, but when couples have things like a house and kids, it should be significantly more.

Petsis said on PhillyBurbs.com that with expenses such as money to run the household, mortgage payments, college payments and a retirement fund, parents with two children and a total household income of $100,000 may need as much as $1.75 million in insurance each, which he called "almost mind boggling."

The numbers Petsis looked at in his analysis include if one or both parents died, the amount of money the children would need in order to be properly cared for if one parent died and a nanny was needed[,] and other costs, such as cars and monthly bills.

Mike Holman writes on the Money Smart Blog that couples who are retirement planning without children should have sufficient life insurance so the spouse can survive and have a similar standard of living. He said to factor in the annual living expenses and then figure out the required portfolio size needed based on how much is made per year.

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