Suppose the Wrights found that both Tom and Sue had a life insurance protection gap of $50,000. Present the s

Sue and Tom Wright are assistant professors at the local university. They each take home about $40,000 per year after taxes. Sue is 37 years of age, and Tom is 35. Their two children, Mike and Karen, are 13 and 11.

Were either one to die, they estimate that the remaining family members would need about 75% of the present combined take-home pay to retain their current standard of living while the children are still dependent. This does not include an extra $50/month in child-care expenses that would be required in a single-parent household. They estimate that survivors' benefits would total about $1,000 per month in child support.

Both Tom and Sue are knowledgeable investors. In the past, average after-tax returns on their investment portfolio have exceeded the rate of inflation by about 3%.

So, what's the question?

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If you want to know how much coverage they should get, general rule of thumb is 10 times their gross income, which is $400,000.on each.

A term insurance policy with a possibility to change it to whole life would be fine. It keeps the expense of the policy to a minimum. Showing that either are beneficiaries to the other. And the children or their guardian as the beneficiaries if something happened to the parents. There are also other kinds of policies that are available that can be used to limit the total amount of funds available at one time and also policies that can be converted to monthly or annually payable vehicles. It would be best to ask an insurance agent from your state. About what is available to you.