Husband vs. Wife: Do We Both Need Life Insurance?

Lori and Marek Fuchs have never fought in their 16 years of marriage—except over money. In this column, Mr. and Mrs. Fuchs, a real-life married couple with three kids (ages 11, 7 and 5), will articulate their very different approaches to personal finance. Last round, they went head to head over how much to tell the kids about their finances.

This round: She says, "I need a life insurance policy." He says, "Why?"

Mr. Fuchs says: We might struggle when it comes to paying bills or how to talk to the kids about budgeting, but we’re no losers when it comes to life insurance.  Just look: We have a solid seven figure term insurance policy on my life.  Plus, since I’m a volunteer firefighter, I have a separate policy through the fire department in the event I’m ever killed in the line of duty.  If I go, honey—especially in an inferno—you’ll be one merry little widow. 

Mrs. Fuchs says: Don’t talk like that.  By the way, how much do I stand to make?

Mr. Fuchs says: Put it this way: If I die, you’ll be a suspect.

Mrs. Fuchs says: Nice.  And remind me again: How much do you get if I go?

Mr. Fuchs says: Come again?

Mrs. Fuchs says: How much life insurance do we have on me?

Mr. Fuchs says: Very little.

Mrs. Fuchs says: How little?

Mr. Fuchs says:  Uh, none. 

Mrs. Fuchs says:   Is that a good idea?  In fact, many financial planning professionals say it’s a pretty common oversight, a holdover from days far gone when women didn’t make any money and policies were much more frequently written on men.  Problem is, my retro little valentine, women make money now.

Mr. Fuchs says: I know tha—

Mrs. Fuchs says
: In fact, between this column and our videos on TheStreet.com, more of our income is tied together.  If I go, have fun finding a video and writing partner before your next deadline.

Mr. Fuchs says: Good point.

Mrs. Fuchs says: And what about child care?  Despite your contributions around the edges, I do the bulk of it.  With me out of the picture, that means big time bucks for you in terms of child care for three kids, help driving them places, summer camps to augment when school is out and God know what else.  Sidney Franks, principal at Highbridge Finanical Group in Tarrytown, N.Y., puts it right.  He says you have to “close your eyes and picture the future.”  When I do that for you, I see lots of child rearing assistance needed.  That’s expensive, and you have to account for inflation, as Franks is quick to point out.  Unless you own 50% of Apple (Stock Quote: AAPL) without telling me, you need insurance on me. 

Mr. Fuchs says: OK, but only a term policy.  Any other type of policy, the kinds with bells and whistles, that double as investment vehicles, are a non-starter.  When I was a stock broker and a colleague sold one, they’d dance around the office, the commission payout was so high.  That’s never a promising sign for the purchaser.



Mrs. Fuchs says: I checked with Suzy Orman, who basically said the same thing in a Q&A in The New York Times.  

Mr. Fuchs says: Why did you have to go check with her?

Mrs. Fuchs says: I trust you, honey.   But I verify with Suzie.

Mr. Fuchs says: Cute.

Mrs. Fuchs says: Franks also spoke about laddering policies.  We’re out 20 years on you, but perhaps we can do a 10-year on me, until the kids are in college.  Whatever the exact choice we make, we have to make it seriously.   You can make a joke about some aspects of personal finance, as The New Yorker a few weeks back in a cartoon.  A couple is sitting at a desk with their financial planner, who says: “What should you do?  Here’s what you should do: invent a time machine, go back sixteen months and convert everything to cash.”  Financial losses, as painful as they are, can be played for laughs, but when someone dies, there is really no time machine.  No change to recoup losses, or do it over again. 

Mr. Fuchs says: I’m sobbing.

Mrs. Fuchs says: Stop. 

Mr. Fuchs says: In all seriousness, I do fear that you are right again.  As Franks says, when it comes to financial planning, you have to look for possible downside.  Here, there aren’t too many.   “No one has ever sent a check back to the insurance company,” he told me.  “What’s the worst that can happen?   You can remarry a rich woman and have even more from the insurance policy.” 

Mrs. Fuchs says: Why, I oughta—

 

Related Stories:

When Does Life Insurance Make Sense?

Seniors Lose Thousands to Spin Life Policies

Husband v. Wife: Can I Get a Separate Account?

 

—For the best rates on auto, home owners, term life and health insurance, check out the BankingMyWay.com Insurance Center.

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