A dozen roses. A box of chocolates. A Star Wars T-shirt. There is a variety of ways to show love says Royal Neighbors of America, one of the largest women-led life insurers in the U.S. However, a truly unique gift that thoughtful spouses and parents might consider during Valentine’s month is the gift of life insurance. While unconventional, it can have incredible value – especially for those who have others who rely on them financially.
When it comes to taking care of dependents, children often come to mind. One of the first concerns of parents is protecting their little ones – physically and financially. Babies don’t come with a price tag. If they did new parents might have sticker shock to learn that the average cost to raise a child from birth to age 18 is $233,610 according to recent figures released by the Department of Agriculture.1 This amount does not include the cost of college.
While the amount may seem shocking, the cost is spread out over the first 18 years of a child’s life. But what happens if one or both of the child’s parents dies before the child reaches maturity? Who will cover this cost? Amie Mendoza, a family lawyer in Tempe, AZ, who lectures on legal guardian issues, suggests each parent should carry an appropriate amount of life insurance to help cover the cost of raising a child if one or both parents dies before the child reaches maturity. In the event that both parents die, the money can be used by the child’s guardian to help pay for the expenses of raising the child to age 18.
However, the cost of parenting doesn’t end when a child becomes an adult. A college education is more important than ever. High school graduates typically earn only 62 percent of their college-educated peers.2 Over a lifetime that wage gap adds up. While a college education is valuable, it isn’t cheap. The price tag for attending four years at a public college is over $28,000 and a private college is more than $59,000 and rising.3 Parents who want to help their children pay for this expense have a variety of options through savings and investments. An additional choice is to carry life insurance so that their beneficiaries can use some of the money to help pay for tuition or other college-related costs.
Higher education needs are not the only consideration in a long-term financial plan. It is generally recommended that anyone who contributes to the family’s well-being should be insured. For example, if a non-wage-earning spouse dies, the cost to replace the vital functions she/he provides for the family, such as money manager, cook, chauffeur, and psychologist, have been estimated to be valued at $113,586 a year.4 Not only that, childcare costs have skyrocketed in recent years. According an article in Fortune Magazine the cost of infant care is $9,589 a year.5
Moms who can earn enough to offset the cost of childcare face another financial disadvantage – unequal pay. Women still earn less than men – an average of $10,291 less per year according to Expert Market.6 The figures are even worse according to the study, The Simple Truth about the Gender Pay Gap. The study cites women are paid 78 percent of what men are paid.7 This puts women in a particularly vulnerable position as this pay gap adds up even more over a lifetime.
Dawn Boyd from Grand Forks, ND, has been an advocate for life insurance for decades based on an incident she experienced as a young teenager.
“My mother was a recorderi for the life insurer Royal Neighbors and she was concerned about a woman in the community,” said Boyd. “The woman had two daughters and was pregnant with another baby. Her husband was still young and healthy and she did not work outside the home. Although she couldn’t explain it, my mother felt compelled to talk to this woman. She met with her and convinced her to talk to her husband about taking out life insurance, which he did.
A month later the woman’s husband was killed in an accident when the ditch he was digging caved in. The woman’s baby boy was born the day after the funeral. I’ll never forget that. That was a lot for that young woman to face, but I know my mother was relieved to know that through her encouragement that young woman’s life insurance provided enough income for the family to get by in a very difficult time.”
It has been more than 50 years since the incident took place, but it made Boyd a firm believer in life insurance. Both she and her husband took out policies at their work as well as individual policies. They also purchased youth insurance for their children. When the children reached maturity they converted their youth policies into adult coverage.
Valentine’s Day means many things to different couples. A candlelit dinner, a night of dancing, or even a picnic in the park can be a romantic delight. But for those who want to take a long-range view of love by financially providing for those they care about, life insurance is a gift that goes beyond a lifetime.
About Royal Neighbors
Royal Neighbors of America, one of the nation’s largest women-led life insurers, empowers women to meet the needs of their families with annuities and life insurance products such as whole life, simplified issue, term, and universal life. Royal Neighbors was founded in 1895 and is headquartered in Rock Island, IL with a branch office in Mesa, AZ. For more information, visit www.royalneighbors.org or call (800) 627-4762.
1CNN Money, It costs $233,610 to raise a child, Kathryn Vasel, Jan. 9, 2017, online article, http://money.cnn.com/2017/01/09/pf/cost-of-raising-a-child-2015/. If you cannot access this article on-line, you may call (309) 732-8376 to request a copy.
2Boston Globe, New study shows the value of a college education, Hope Yen, Feb. 11, 2014, online article, https://www.bostonglobe.com/news/nation/2014/02/11/new-study-shows-value-college-education/3IWWEOXwQEAcMFSy09msOK/story.html. If you cannot access this article on-line, you may call (309) 732-8376 to request a copy.
3Forbes, College costs could total as much as $334,000 in four years, Troy Onink, Jan. 31, 2015, online article, http://www.forbes.com/sites/troyonink/2015/01/31/college-could-cost-as-much-as-334000-total-in-four-years/#3f45ea57679f. If you cannot access this article on-line, you may call (309) 732-8376 to request a copy.
4Business Insider, Here’s how much it would cost to replace your mom, Mandi Woodruff, May 8, 2013, online article, http://www.businessinsider.com/value-of-stay-at-home-moms-2013-5. If you cannot access this article on-line, you may call (309) 732-8376 to request a copy.
5Fortune Magazine, Think college is expensive? In most states, child care cost even more, Sept. 28, 2016, Valentina Zarya, http://fortune.com/2016/09/28/child-care-costs/, online article. If you cannot access this article on-line, you may call (309) 732-8376 to request a copy.
6The Huffington Post, Here’s how much less women make in each state, Jan. 27, 2015, Harry Bradford http://www.huffingtonpost.com/2015/01/27/gender-pay-gap_n_6556402.html. If you cannot access this article on-line, you may call (309) 732-8376 to request a copy.
7The Simple Truth about the Gender Pay Gap, Linda D. Hallman, 2014, p.3, http://www.aauw.org/files/2014/09/The-Simple-Truth_Fall. If you cannot access this article on-line, you may call (309) 732-8376 to request a copy.
iThe recorder position in Royal Neighbors is now referred to as secretary/treasurer.