Life Insurance and Blended Families

Sheri and I have been married for about 5 ½ years.  Ours is a blended family, this is our second marriage.  I have 3 sons and Sheri has a daughter and 3 sons.  We’re not quite the Brady Bunch; all of our kids are adults, live on their own, and there is no “Alice.”  We’ve been blessed with 4 grandchildren, so far, and look forward to more!

Roughly 50% of all first marriages end in divorce.  The odds are pretty good that about half of the readers of this post are in a similar family makeup as Sheri and me.  My goal is to share the discussions we’re having between the two of us, as well as our adult kids, about what happens when we die.

Some would find discussing, planning, and communicating our wishes and desires for that day as morbid or scary.  Our perspective is very different.  We believe it’s vitally important for us to answer these questions within our marriage while consulting with our kids.  Our hope is that by doing so, everyone is on the same page, understands what we want, and knows the steps we’ve taken to alleviate any guesswork about what needs to be done.

Sheri and I are reviewing life insurance, along with wills, powers of attorney, and other related documents.  We don’t have everything completed; however, once we’ve finished discussing this between ourselves and with our kids, we’ll have it finalized before the end of March.  My goal in sharing our process is that it will provide insight for you and your family, blended or not.

There are three questions I ask all clients and prospects when we discuss life insurance:

  • What do you want it to do?
  • How much will it take to accomplish that?
  • What is feasible within the confines of your budget?

Sheri and I were parents before we married, and we didn’t stop being parents once we said “I do!”  Our goals for our life insurance policies are primarily twofold:

  • Provide income for the surviving spouse
  • Provide a legacy for our kids

Sheri purchased the house we currently live in before we married.  This doesn’t become part of community property and her desire is to leave it to her kids.  Whether they choose to live in it or sell and disperse the proceeds 4 ways is entirely up to them.  We’re evaluating additional life insurance on her to pay the home off and an additional amount that will either be for me or to pass on to her kids.

My goal is to provide replacement income for Sheri to utilize for retirement, pay the home off, or use as she decides.  In addition, I’ll be adding increased coverage in updated life policies for my sons that they can use for a down payment on a home, set up educational funds for their children, or whatever they believe is needed at that time.

The second question is how much coverage is needed on Sheri’s and my revamped policies to accomplish these goals?  The unpaid balance of our home provides the base amount on each of our policies.  Added to my new policy will be an amount Sheri needs to make the transition from a two income family to being on her own followed by how much extra is needed to help fund her retirement.  I am also determining what fixed dollar amount to leave to my kids.

We are conducting the same process related to Sheri’s policy.  That means determining how much coverage we need to pay off the house for her kids to assume it debt free, as well as provide me with one to two years of expenses to make the transition to a one income family.

Once we’ve determined ideal amounts, I’ll obtain quotes from the life insurance companies I work with to compare with what fits within our budgetary constraints.  That may allow us to start with the entire amounts we’d like to have, or it may require we buy a policy this year, another next year, and so on until we arrive at the amount we believe is needed.  This approach helps us by needed coverage now, add to it later and extend the coverage out over a longer period of time.

I believe we’re on our way to providing each other and our adult children with the peace of mind that this has been thought out and planned.  By involving them throughout the process, they are aware of our goals and desires.  They also know our plans include them and their children.  As my youngest one said to me in an email, “One thing, we are all family.  Not blended.”  I think we’re getting this right!

What suggestions, comments, or questions do you have for Sheri and me?  Share them with me in the comments section of our blog or on our Facebook and Google + pages.  We’ll all learn something from each other.

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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