DO STAY-AT-HOME PARENTS NEED LIFE INSURANCE?
One of the most important reasons to acquire life insurance, if you have loved ones who rely on you for financial support, is to help replace your income if something happens. But should you even bother getting coverage if you are a stay-at-home parent with no paying job? You are technically not making any money, right? Well yes, you should still get covered.
When it comes to life insurance, stay-at-home moms and dads are sometimes disregarded. Because many couples believe that only the income-earning parent requires life insurance, the stay-at-home parent is frequently overlooked. However, this shouldn’t be. While stay-at-home parents (SAHPs) may not earn a six-figure salary in a corner office, all parents are "working" parents because they offer a variety of useful services to the family.
A life insurance policy for a stay-at-home parent doesn't replace their income; rather, it gives the funds required to cover all of the jobs the SAHP did if death happens.
Let's look at why stay-at-home parents require life insurance and how much coverage they need.
WHY DO STAY-AT-HOME PARENTS NEED LIFE INSURANCE?
Life insurance is intended to assist in the protection of your loved ones. Many families get life insurance for the parent who works outside the home to replace part of the income that may be lost. But what happens if the parent who stays at home dies unexpectedly?
A parent who stays at home with their children is more than just a mother or father. These people wear several hats, including tutor, cook, child care provider, chauffeur, housekeeper, laundry services, caregiver amongst others. Stay-at-home parents are often multi-taskers yet they are undervalued in the traditional sense.
Even though stay-at-home parents do not earn an income, they provide significant financial support to their families. Consider how much a stay-at-home parent could earn if they were compensated for their efforts. Someone would have to be recruited and paid to care for the children, prepare meals, conduct errands, and manage other household responsibilities if the SAHPs weren't available. And that's a big outlay in and of itself. It’s a cost that the working parent would have to bear if the stay-at-home parent died. In a nutshell, the inherent value of those responsibilities is immeasurable, but their economic value is quantifiable. This is one of the main reasons why financial gurus typically advise both earning and stay-at-home parents to buy
life insurance. Buying life insurance for a stay-at-home parent is a thoughtful and humane approach to ensure that your family is financially secure in the event of the unthinkable.
A life insurance payout will not only provide the surviving parent with income to meet child care costs or other household costs, but it will also assist in the final expenses. The stay-at-home parent may also wish to consider purchasing a life insurance policy to leave a legacy for the children. You can leave your children an inheritance by putting life insurance in a trust for them.
While not a common reason for people to get insurance, having life insurance in the event of divorce helps. No matter why you're getting insurance, it's better to acquire it while you're young and healthy because you'll be able to qualify for a reduced cost. If a divorce occurs later, either parent who does not have health insurance may find it difficult to locate cheap coverage—or even get coverage if health problems arise.
WHEN SHOULD A STAY-AT-HOME PARENT GET LIFE INSURANCE? Young and healthy people, on average, pay less for life insurance coverage. If you're fresh out of college and debt-free, you might not need it yet. However, if you're ready to get married start a family, it's a good idea to buy coverage now. Even if you plan to wait before beginning a family, a smart moment for you as a future stay-at-home parent to consider obtaining a policy is when you meet a partner with whom you wish to raise children. Then, no matter how long it takes for that little one to arrive, you'll be covered. After all, they're prone to arriving on their timetable and frequently earlier than you'd anticipated.
HOW MUCH COVERAGE DO STAY-AT-HOME PARENTS NEED? Here’s the key question. How much life insurance coverage should you get? If you're a stay-at-home parent without a source of income, determining a coverage amount may seem difficult. Because every family is different, there is no one-size-fits-all answer, but a 15- to 20-year policy is a good rule of thumb. The kids will be grown and out of the house by then, so there will be no need for so much coverage. However, you can assess how much coverage you require by considering the following;
1. Total Number Of Children
The more the number, the more the coverage. Find out how much childcare, after-school care, or a full- or part-time babysitter costs in your area. You should have enough life insurance to cover the cost for all of your children until they are old enough to no longer require care.
Many parents opt to homeschool their children. If this is the situation in your family, you and your spouse must decide where the children will attend school if the SAHP is lost and how much it will cost.
3. Household Responsibilities
If the stay-at-home parent passes away, who will be responsible for cleaning the house? And how much are you willing to spend on it? If your spouse will need to employ a house cleaner, a lawnmower, or someone else to help with the tasks you normally handle, include those expenditures in your life insurance calculations as well.
If you plan to return to work, think about how much income you'll make. This is because your household spending will almost certainly rise in tandem with your income. You'll need adequate life insurance to replace the income you expect when you return to work so your family can maintain their current standard of living. If you purchase adequate coverage now, you can lock in a lower rate than if you wait until you return to work to buy more coverage.
Term life insurance is one cost-effective option that can give a large death benefit to cover the household for a specified period (10, 15, or 20 years) in which the family is most at risk in the event of the SAHPs death, at an affordable premium. Many term life policies can be converted to whole life or permanent life insurance policies after the term period has ended or when a certain age has been reached. After the children have grown up, a stay-at-home parent performs fewer services, and less coverage may be required.
We all know that a parent can never be replaced. Nothing will ever be able to fill that void. It's also unpleasant to consider what would happen to a family if a stay-at-home parent died. However, it is critical to choose a way to replace their income. The surviving spouse can employ someone to fulfill many of the responsibilities that the SAHP used to cover with the money from a life insurance payout. For many families, paying a little monthly premium for life insurance can bring peace of mind, knowing that whether you are a stay-at-home parent or a working parent, life insurance can help provide financial support.
If you and your spouse are thinking about getting life insurance for the family's stay-at-home parent, the easiest approach to figure out what kind of coverage is right for you is to contact us.
We're here to assist you in thinking through the difficult issues so that your family is better protected. Before making a purchase, you might want to get quotes from a few different companies.
Get the right life insurance policy for both parents to ensure that your family's needs are covered!