I don’t like to think of my husband dying unexpectedly. However, because I want to make sure that I am financially prepared for a variety of unpleasant scenarios, it is something that I have thought about. And, as depressing as it might be to consider the possibility, you should take a few minutes to consider a financial plan for the death of your spouse.

Photo: sindorella

Life Insurance

As you might guess, life insurance is probably the most important aspect of making a plan to help you in the event of the unthinkable. The life insurance policy on my husband is not very large. This is because I am the primary breadwinner, and the primary caregiver (I work from home). The payout would be enough to retire our student loans and the car loan, and leave some left over to set aside to help with my son’s college costs. However, since my husband is almost done with his schooling, we will have to increase the coverage to reflect his new earning power.

The life insurance policy covering me is larger. It’s enough to pay off our mortgage on top of other costs, as well as enough to pay for our son’s care during the hours that he is not in school. (We assume that my husband would have a job if I died.)

Other Considerations

It’s not just life insurance that you have to worry about, though. When a two-parent household suddenly becomes a one-parent household, adjustments have to be made. Cooking, cleaning, childcare and emotional issues have to be considered. Funeral expenses and the costs associated with moving house (if you decide to move closer to family support systems) also have to be considered. Additionally, if the bread-winning spouse dies, you have to contend with the loss of benefits in many cases. What would you do if you lost the health insurance through a spouse’s work and had to pay for a new plan?

Even if you lose a non-earning spouse, it is important to consider the costs. A spouse that stays home provides economic value to the family by offering services that you would have to pay for if he or she were gone. You might need to hire childcare, or pay for help with household tasks if you didn’t feel you had the time to manage the household and work full-time. This consideration becomes especially important if you want quality time with your children. You may not think of the economic benefit that a stay at home spouse brings to the family until you stop and think about all the things you would have to do with the loss of a spouse — and how much it would cost to pay someone to help you out.

Preparing for the Unexpected

Take a few minutes to review your finances, and consider what would happen at the death of your spouse (or what would happen if you died). Review life insurance policies and make sure they are adequate. You should also make sure beneficiary information on bank accounts, investment accounts and other financial products and services is up to date. The loss of a spouse is never a smooth transition, but you can keep it from being financially devastating.