Stay-At-Home Parents and Life Insurance
Life insurance is an essential part of providing for your spouse and children in the event of your unexpected death. Not only can funeral costs place a burden on the family finances, but additional money is usually needed to get through day-to-day life, cover bills and help accommodate large expenses such as college tuition. When it comes to deciding on a life insurance policy, in most cases, the amount of the policy will be based on the wage earner's income to ensure that expenses can still be covered if they pass away. So what about a stay-at-home Mom? What about a stay-at-home Dad?
Often families forget to take out life insurance policies on stay-at-home parents, due to the fact that at least on paper, they are not bringing in the money necessary to cover the bills, but what many people fail to realize is the financial contribution that stay-at-home parents actually make to the household.
"A good man leaves an inheritance to his children's children, but the sinner's wealth is laid up for the righteous." Proverbs 13:22 ESV
The Financial Contribution of a Stay-At-Home Parent
While most will agree that being a stay-at-home parent is often one of the toughest jobs in the world, many fail to actually put a monetary value on how they contribute to the household. If the stay-at-home spouse was to suddenly pass away and all of the duties that they usually performed had to be outsourced, the annual total could be as high as six figures. Listed below are just some of the expenses that a stay-at-home parent provides for a family and how much it would cost if you had to hire others to complete these tasks.
The most significant expense that would need to be replaced in the event of a stay-at-home parent's death is child care. According to the 2017 Parents and High Cost of Childcare Report, researched by Childcare Aware of America, the report shows that Americans average 7 to 12 percent of the average median salary in America providing the cost of child care for their children. This can vary from state to state with some states running higher than 12%. On average, a household will spend an estimated average of $900 per month or $11,000 per year, per child on childcare. It is this expense alone that often causes one parent to decide to stay at home in the first place. If you have a child with special needs or circumstances, consider potential added cost here as well.
Cooking and cleaning are the primary functions in the household that one might have to outsource in the event of a stay-at-home parent's passing. House cleaning rates can run an average of $9.00 to $15.00 per hour with cooking duties adding on to that cost. Additionally if instead of hiring out a cooking service you were to outsource grocery shopping, meal prep, or food delivery services you can expect an added expense for that as well.
Stay-at-home parents are often the bookkeepers, repair people, gardeners, and personal assistants that help maintain the household. While these duties could fall to the remaining parent, it would be difficult to fit in these additional hours while still providing for the family through a traditional job and taking care of children after work hours. Outsourcing these tasks can add hundreds of dollars to your monthly budget.
Buying a Life Insurance Policy for a Stay-At-Home Parent
Purchasing a life insurance policy for your stay-at-home spouse can be a little more complicated as there is no income level to set the amount by and you will need to create an estimate of the duties your stay-at-home spouse performs and what it would cost to have those tasks replaced by a third party to help determine what the spouses income actually would amount to.
Additionally, you will want to follow the same rule of thumb that you would with a wage earner by determining what five times the value of their income would be to help establish the amount of life insurance that should be carried for them. If you have multiple, or really young children, you will want to be sure to include enough to cover them for child care up through school age or perhaps longer. When thinking about how much life insurance is appropriate for a stay at home parent, it's important to think about the cost for providing things like childcare would be covered. If you get a life insurance for a stay-at-home Mom, as an example, remember you can get a policy for a different amount for Dad.
What kind of life insurance should a stay at home parent have?
For most families, term insurance will be the right balance between cost and adequate protection. Situations vary, so important to consider all factors and other kinds of life insurance may be more appropriate in your specific case. Term insurance allows you to buy a policy intended to last for length of time (term) that you want to cover. You generally want to insure the period of time up through when your youngest child reaches adulthood.
Don't wait until it's too late to realize how much your stay-at-home spouse contributes financially. Protect yourself and your children by protecting them with a stay-at-home parent life insurance policy to ensure your family's future in the event of your spouse's death. Life insurance for a stay-at-home parent can help give you peace of mind and protection that hopefully is never needed.
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