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Summer 2022  Volume 15, Number 2        
 

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Why Stay-At-Home Parents Need Life Insurance

Stay-at-home parents probably do the job of six or more people, taking care of everything from being a nanny and nurse to a chauffeur and chef.

Despite this, there’s a common misconception that only the parent responsible for the household earnings should be insured.

Stay-At-Home Parents Provide Financial Support

Stay-at-home parents usually manage all the responsibilities that would otherwise be outsourced to someone else. For example, according to Care.com, in 2019, if you put your child in a childcare center, you would pay approximately $215 per week.

If you require after-school care, you would pay $243 per week, while a nanny would cost as much as $565. You could be paying anywhere between $11,180 and $29,380 per year for someone to look after your child.

How Life Insurance Helps

One of the most important reasons to buy life insurance is to help replace the family income if something were to happen to the breadwinner. But what about the stay-at-home parent? If you’re a stay-at-home parent, you might not be bringing in income per se, but the cost of the services you provide also need protection.

While it’s something no one wants to think about, if the stay-at-home parent were to pass away, the family would probably be put under great financial strain. Of course, nothing can replace a parent, but with life insurance the essential services they had been providing could be outsourced and financed.

Life insurance could also cover final expenses. According to the National Funeral Directors Association, a funeral with burial can cost as much as $7,640. There might also be other expenses that need to be covered, such as leftover medical bills.

How to Determine How Much Coverage Is Needed

For a breadwinner, determining the level of coverage needed is usually straightforward. However, things can get a little more complicated for a stay-at-home parent. (Though actually, they can also get somewhat complicated if the breadwinner dies and the stay-at-home parent decides to go back to work, something which we will also discuss a bit later in this article.)

The Size of Your Family

Obviously, the more children you have, the the higher the limit you should purchase. Do a little research and determine how much it would cost to provide childcare, including the cost of childcare facilities, babysitters, and after-school care.

The goal is to purchase limits that will cover all these costs until such time as the kids are old enough not to require care. Also, consider other factors, such as whether it will be necessary to hire someone to clean the house, mow the lawn, do the cooking, or anything else currently handled by the stay-at-home parent.

A no-exam life insurance policy is undoubtedly attractive because of how easy it is to get. First, however, consider the amount of coverage you need. It’s probably not going to work for you if you need higher limits. And if you want to cover a longer timeframe, you might need more insurance than these policies provide.

What if You’re a Stay-At-Home Parent Who Decides to Go Back to Work?

This is the reverse situation. Suppose your family has decided that if something happens to the breadwinner, the stay-at-home parent will return to work? Then of course you’re going to be relying on the proceeds of the breadwinner’s life insurance policy.

But the same considerations that went into determining what policy limit to carry for the stay-at-home parent’s life insurance policy will still apply — cost of childcare facilities, babysitters, and after-school care, etc. — plus most likely a lot of other considerations, such as financing college tuitions, paying off long term debt and more.

There seems to be a clear need for life insurance for both breadwinners and stay-at-home parents. For help figuring the kind of life insurance policy and limits would work best for your family, please give us a call.

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In this issue:

This Just In...

Is No-Exam Life Insurance Right for You?

Why Stay-At-Home Parents Need Life Insurance

Many Americans Will Soon Get Medical Debt Removed from Their Credit Reports

Medicare Now Covers Up to Eight At-Home Covid Tests

 

 

 


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