These days, if there’s something important in our lives, we insure it. We insure our health, our homes and valuables, our vehicles, and even our identities. But when it comes to life insurance, are we covering everyone who needs it?
Stay-at-home parents contribute a great deal to the daily operations of a family. They provide a variety of services: everything from childcare to housekeeping, to paying the bills, to chauffeur services. It’s hard to quantify that kind of contribution. But like the breadwinner of the family, there’s a significant financial impact that will be felt in the event of their passing. Life insurance can help ease that financial burden, allowing your family to focus on recovering from the loss.
The Purpose of Life Insurance
Unlike other forms of insurance, which are designed to cover costs that come up in the course of life, life insurance is designed to help offset the financial ramifications that come as the result of a loved one’s unexpected death. This is usually thought of in the context of those earning an income—if, for instance, a family’s breadwinner is earning $50,000 a year, their sudden passing leaves a financial hole. That income stops coming in to pay for bills and necessities, and families without a second breadwinner often struggle to make ends meet. That’s where the life insurance comes in. A policy that, for instance, covers $500,000 would equate to ten years at the above-mentioned income.
That helps cover lost income, but what about covering for the loss of services provided by a stay-at-home spouse? According to salary.com, their contributions to family operations can average nearly $113,000 in services and overtime. Filling in the void left by the loss of such a family member is not easy, and with regards to paid services, it can be very expensive. An insurance policy on a stay-at-home parent ensures that the surviving spouse has the flexibility to leave work to care for the family, or to pay for help dealing with essential functions in the home.
In the end, life insurance is about freedom—the freedom to do what you need to in order to care for your family in the event the unthinkable happens. The stay-at-home spouse isn’t the only one who deserves that freedom, and when disaster strikes, paying the bills is the last thing you want to have to worry about.
How Much Do I Need?
The policy you want to have will be at the crossroads of what your family can afford, and what your family needs. The primary needs you’ll want to consider are:
Child care expenses
Other household work
Child care will be the primary cost you’re looking to cover, and how much you allot for it will depend on how you expect to handle it. Do you hire a live-in nanny, a babysitter, or simply use daycare services? How many years will I need the services?
Next, you’ll want to consider other household tasks that are usually handled by the stay-at-home spouse. Will the surviving spouse require maid services? How about help balancing the budget? Will the children need tutors? Debts and long-term goals like college savings are also good to consider, as they provide a cushion for the surviving spouse. Then, make adjustments as needed by what your family can afford.