When we think about life insurance, everyone knows it is important to cover the bread winning parent’s income in case of tragedy. But does the stay-at-home parent need life insurance coverage as well? Many people don’t think so because the value of the stay-at-home parent is not fully recognized until they are gone.
However, if something were to tragically happen to a stay-at-home parent, their death would not only have an immense emotional impact but could also be financially devastating to their family.
Let’s discuss why it is so important for the stay-at-home parent to be covered by either a term or whole life insurance policy.
Before anyone purchases life insurance they need to do a proper needs analysis to make sure they are purchasing enough coverage to support their family’s need that arises from their tragic death. This is typically easy to calculate when the parent is working, and you can review their income compared to the income necessary to keep the family’s bills covered. But for the stay-at-home parent, the value isn’t as easily calculated. There are a lot of factors to take into consideration when deciding how much coverage a stay-at-home parent needs.
Of course, no amount of money will ever be able to replace the loss of a parent. But it will certainly help cover the costs of replacing the things a stay-at-home parent does. Think of the many job titles a stay-at-home parent can fulfill:
As you can see, the list is just about endless! Now imagine the amount of money it would take to outsource each of these services to another person! Just because the stay-at-home parent doesn’t receive a paycheck each week doesn’t mean they don’t provide a significant financial value to their family. According to Salary.com’s 2018 Mom Salary Survey, the most common roles fulfilled by a stay-at-home parent translates into a total salary of about $162,500 a year!
When a family faces the premature and unexpected loss of either parent, the remaining parent is likely going to face a financial burden of having to hire other people to help them fill in some of the roles covered by the stay-at-home parent. Your family might want your life insurance policy to have enough coverage to pay off the mortgage so your family can reinvest those funds towards other expenses such as hiring a cleaning service, hiring a private tutor, eating out more, or whatever your family needs to ease the transition of losing you.
When your family is considering how much life insurance coverage is needed to cover the stay-at-home parent, you need to think carefully about what services the remaining parent will need help with covering and how much it will cost to hire someone to assist with those services.
One major expenses a family will face following the unexpected and premature loss of the stay-at-home parent is the cost to place their children in childcare while the remaining parent is at work.
In Florida, the average cost of center-based childcare is $770 a month for a single infant! And that is only the expenses for childcare if the other parent has a regular 9 to 5, Monday thru Friday job and will be able to pick their child up before the childcare center closes (usually around 6 PM). If the parent works nights, weekends, or must travel for work, they will also have to rely on a private nanny to come in to the home and assist with childcare, adding even more to the amount of childcare costs.
When you are determining how much life insurance coverage to purchase for the stay-at-home parent, you should be considering what childcare costs would be for the family if the stay-at-home parent wasn’t there.
One cost that families often don’t think of when their children are young is how they could help their children with educational expenses in the future if one parent were to die prematurely and unexpectedly.
If the stay-at-home parent does not have life insurance coverage and passes unexpectedly, the remaining parent will be required to use a good portion of their financial resources to cover the daily living expenses of the family while the children are young, making it even more difficult for that parent to put together a savings fund for the children’s future educational expenses such as college, or even private school if that is what the family wants.
A life insurance policy is a great way for the stay-at-home parent to ensure their children will be able to receive the education they want them to in the future if something unexpected happens to them.
No matter who life insurance is purchased to cover, one of the main expenses you want to consider when determining how much life insurance coverage to buy is what your final wishes are—whether you want to be cremated or buried and what type of funeral or memorial service you want to have, and what the costs of those services will be.
Your life insurance policy should have plenty of coverage within it for your family to follow all your last wishes without having to worry about any of the costs. Your family will be devastated enough coping with the premature and unexpected loss. The last thing you want is for them to be financially stressed about how to cover your final expense costs.