FROM THE LEARNING CENTER
5 Reasons Why Stay-At-Home Parents May Need Life Insurance
by Bestow Team | September 29, 2021
6 Minute Read
These days, many news outlets constantly discuss the continuing rise of two-income households where both parents work, leaving the children in daycare or with extended family. In reality, recent years have seen a rise in the number of parents who stay home to take care of their children.
And as all stay-at-home parents know, you don’t spend your days lazing around the house doing nothing. You have to do a lot of work to take care of the kids and keep the household running. In fact, the median value of the work of a stay-at-home spouse was $178,201 in 2019. So, if you’re a stay-at-home spouse wondering whether or not you need life insurance, the answer might actually be a resounding yes.
Your kids and surviving spouse would likely feel the financial effects of losing you. Buying life insurance, however, may help lighten that burden and give you some peace of mind.
What Stay-At-Home Parent Duties Life Insurance Can Cover
Life insurance doesn’t have to stop at annual income replacement for working spouses. Think about all of the things you do in one 24-hour period as a stay-at-home parent. With the right amount of coverage, you can leave behind a benefit that could help keep your family afloat in the event of your passing.
Life Insurance can help cover:
- Daycare costs
- Food & meal preparation
- Household chores
- Education expenses
1. Daycare Costs
Life insurance can help cover the cost of childcare should you pass away.
While it’s true that stay-at-home parents might not bring in much income, you do cover a major expense in the family’s budget: childcare.
The average annual cost of childcare in the US is $11,666 per child. Given that most families have trouble saving more than $500 for an emergency, hoping that your spouse can find an extra $12,000 in the budget each year to pay for daycare should you pass away is rather optimistic.
2. Grocery Shopping And Meal Preparation
After childcare, grocery shopping and cooking can be one of the most valuable things a stay-at-home parent contributes to the household. Eating out or ordering delivery is as much as five times more expensive than eating a home-cooked meal.
Once the working parent returns to work, it may be necessary to hire extra help to make sure everyone is fed. The payout from a life insurance policy could help make those costs more manageable.
3. Hiring Help to Keep the House Running
Homemakers tend to do more than just care for children, even though that’s a full-time job in and of itself. Most stay-at-home parents do things like laundry, house cleaning, running errands, scheduling, and more.
Think about what would happen if you were to pass away today: Your spouse and children would have a lot to deal with, both emotionally and logistically. Not only that, your family will need a lot of help while they grieve, keeping up the day-to-day running of the home that they are now responsible for.
With a life insurance policy, the payout can help families cover the cost of outsourcing these jobs, especially when the working parent returns to work.
Being the only guardian for a while may make it harder to coordinate pick-ups and drop-offs with kids going to school, extracurriculars, lessons, friends’ houses, and more.
An insurance payout can allow your family to hire help to ensure your passing does not impact your children’s ability to sign up for sports, music lessons, and other activities.
5. Education Expenses
Whether it’s helping with homework or more formal homeschooling, supporting a child’s education is another stay-at-home parent responsibility that carries real value. A life insurance payout can help cover the cost of tutors, after-school programs, or K-12 education
Moreover, with extra costs for childcare and hired household help, the idea of paying college tuition in a single-earner household can be especially daunting. The right coverage could help ease the burden of tuition costs if you were to pass away.
What Type Of Life Insurance Policy Should Stay At Home Parents Get?
There are lots of insurance options out there, and choosing what’s best for your family’s needs is a very personal decision. The two most common types of life insurance are term life insurance and permanent life insurance, also known as whole life insurance. Term life insurance policies cover for a set amount of time, usually 10, 20, or 30 years, while whole life insurance policies cover you for your entire life.
Term Life Insurance
Because term life insurance is active for a set amount of time, it is typically one of the most affordable policies to get. For young parents just starting their families, term life can be an affordable way to help protect your family’s future financial stability.
Moreover, term life insurance may be all you need. For example, buying a policy with a 20 or 30 year term could cover you until your children are able to provide for themselves.
Whole Life Insurance
Whole life insurance, on the other hand, is often more expensive than term life insurance. It has a guaranteed death benefit, meaning that your loved ones would get a payout no matter when you die, as well as a cash value.
How To Determine The Right Amount Of Life Insurance Coverage For Stay-At-Home Parents
Some things to consider:
- How many children you have – you may want to pick a policy that will cover the cost of raising your children until they no longer need care. So, the bigger the family, the bigger you may want your policy to be.
- Whether or not you plan to return to work – if you only plan to be a stay-at-home parent for a couple of years before returning to work, make sure to factor in roughly the wages your family will forgo if you pass.
- How old are your kids? How far are they from financial independence? – the younger your kids are, the further away they are from financial independence. That means it could cost a bit more to help set them up for some financial stability.
- The cash value of your stay-at-home duties – the cash value of your stay-at-home duties can vary from state to state (and household to household depending on what’s involved). It may be a good idea to roughly calculate how much it would cost to replace you at home. Consider childcare, cooking, household chores, transportation, education costs, and any other relevant expense.
You can opt for just enough to cover end-of-life and burial costs, somewhere in the middle to keep your family comfortable for a few years, or even choose to leave behind a financial gift to pay for future expenses, like college tuition. Your coverage amount is a personal decision that only you and your family can make. However, if you do need a little help, a (commission-free) insurance agent can help you figure out how much life insurance would be good for your situation.
Buying Life Insurance For A Stay At Home Parent
Stay-at-home moms and dads have an incredibly difficult job. Help protect what you’ve built in your home with a life insurance policy, and rest easy knowing your family’s financial future is taken care of.
Are you a stay-at-home parent looking for life insurance? With Bestow, you can get term life coverage in 5 minutes, no medical exam required, if approved. Get your life insurance quote now.