It is always sad when a family suffers a loss, and it is doubly sad when the family then faces challenges because they weren't prepared for the possibility of a loss. Thinking about the possibility that your spouse might die is hard, but trying to imagine that situation is a key step in knowing how to prepare. In particular, decisions about life insurance and Survivor Benefit Plan (SBP) elections can not be made well without thinking about the choices that you would face. This includes where you would live, whether you would work, how you would pay for expenses and your thoughts on things like college funding for children. Basically, it is making plans that you hope you'll never use.
When my husband and I were new parents, we spent some time reviewing our wills and other legal documents, and then we thought about how much life insurance we needed. As part of that process, I thought about where I would want to live. When the girls were little, I thought that I would move near his brothers, who happen to live in an area with a low cost of living. This means I would need less income than if I wanted to live near my siblings, who live in expensive areas.
As the years progressed, my thoughts changed, and now that the kids are all in high school, I would want to stay here in the pricey DC area. In that area, my income needs have increased. On the other hand, I didn't work at all when the kids were little, and I thought that I would definitely want to stay home if my husband died, meaning more income needs. Now that I am working, our needs in that department are a little less.
I know it sounds morbid, but try to paint a picture of how you would want life to look if your spouse dies. Without this picture, you can't adequately predict income needs, and so you can't make smart decisions about life insurance and other issues. I encourage you to talk about it with your spouse, as they may have preferences or concerns or ideas that impact your thoughts.
Major Topics to Consider
Where would you live? Would you remain in your current location, or move near family, or to a whole new location? Would you stay in the same house or move? Would you need a larger house for family coming to help, or a smaller house that requires less upkeep?
Regardless of whether you work now, would you want to work if your spouse dies? Some people find that work is great for them, other people would rather be a full-time stay-at-home parent. Somewhere in the middle you may find that some jobs are just not really set up for single parenting.
If money were no object, would you have any major lifestyle changes? Some expenses would decrease and some would increase, just think about the big ones. I have a friend whose husband collects fairly expensive cars, and it is a large portion of their budget that would end if he died. On the other hand, widows and widowers with small children often have significantly higher day care and babysitting costs than two-parent families.
What is your position on college funding for your kids? Be sure to consider benefits available through the military, such as the Fry Scholarship and Dependents Educational Assistance (DEA) benefits. If it is your intent to fully fund your children's college expenses, you may have larger needs than someone who doesn't intend to fully fund their child's college, unless your child would be eligible for the Fry Scholarship and/or DEA benefits.
Are there other issues to consider? Do you or your children have special needs that would impact your ability to adapt to live without your spouse? Do you have particularly large debts that would need to be paid? Do you have financial responsibilities to other people, such as other children or parents?
A lot of people don't like this project, and so they don't do it. I find that it puts my mind at ease when I know that I have thought things through and we have made the right decisions so that I will financially be able to make that plan happen if the worst were to happen. Even if you don't like thinking about the possibility that your spouse may die, please find a way to push through and do it. Thankfully, most of us will never have to use these plans, but even one unprepared person is one too many.
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