As a stay-at-home parent, you juggle many valuable and difficult jobs, from making meals and managing bills to chauffeuring kids and cleaning the house. Your (unpaid) labor keeps your family healthy and your household running smoothly.
Although you may not hear it enough, the work you do for your family is priceless. Yet if you had to attach a price tag to the many jobs you do each day, it would cost quite a lot to replace you. In fact, a salary.com survey of stay-at-home moms estimates your labor as a stay-at-home parent could pull in an astounding $184,000 if you received an annual salary.
When you consider this amount, it’s pretty clear that your family would be in a tough financial position if the unexpected happened to you. The good news is that securing the right life insurance policy can help ensure your family will be financially safe and taken care of if you’re no longer around.
Reasons to get life insurance for a stay-at-home parent
Life insurance is important for protecting your family’s well-being and meeting your children’s needs, no matter what the future holds. The death benefit your beneficiaries will receive if you pass away while your policy is active can help cover childcare costs and household management.
Pay for childcare
The rising cost of childcare leaves an enormous strain on families’ finances. Childcare can cost nearly $10,000 each year per child. That means your death benefit should allow your family the flexibility to determine a childcare plan that works for your children’s specific needs.
Whether your family will need intensive infant care, daycare, a nanny, or just an occasional babysitter, you’ll want to include these costs as you consider how much life insurance coverage you need.. That way, if the worst-case scenario happens, your loved ones will be able to focus on grieving and healing, and you can have peace of mind knowing your children are safe.
Pay to cover other household responsibilities
A stay-at-home parent’s responsibilities usually go far beyond childcare. They can include overseeing household finances, grocery shopping, cooking, cleaning the house, and more. It would take several paid professionals to complete the same work. Your death benefit can help your family hire help or purchase tools they need to replace the work you do to keep your household running.
Leave a legacy for loved ones
Finally, as a stay-at-home parent, you can use a life insurance policy to leave your children and other family members a financial gift to invest in their futures. The money your beneficiaries receive if you die during your life insurance term can help them cover future financial emergencies, pay for college, or purchase their first cars. Your life insurance policy can help you support the people who matter most, whether you’re near or far.
How much life insurance is enough for a stay-at-home parent?
Traditionally, people use their income as a guide to help determine how much insurance coverage they need. Of course, it’s trickier to quantify the financial value of stay-at-home parents’ work. To identify the right amount of coverage, consider your family’s characteristics and your specific circumstances.
How many children you have and how old they are
Because childcare is so expensive, the size of your family has an enormous impact on your life insurance needs. The more children you have, the more coverage you’d need to replace the cost of care. Having many younger children or children who will depend on you financially for a long time will also be cause for a larger policy. As your children grow, your death benefit should cover their changing needs, from infant care to after-school programs.
Future income plans
While you may decide to be a stay-at-home parent forever, you could also have plans to return to work once your children start school. As you determine your life insurance coverage needs, make sure you factor in any plans to return to work and how much money you anticipate making. For example, if you plan on working part-time, you can factor in a smaller income than if you plan to return to a full-time job. You may also want to consider your intended industry and previous income in similar roles. That way, your life insurance can replace your projected income and the cost of the work you already do at home.
How much the stay-at-home workload would cost to replace
Stay-at-home parents can still use the standard life insurance guideline: your coverage should be between seven and ten times your current income. However, you may have to get a little creative to determine that income amount. To do so, you can try calculating a figure based on the estimated financial value of your work. For example, how much would your family need to pay for a cleaning service or daycare center in your area?
If that proves daunting or confusing, you can also turn to existing estimates like this salary survey of stay-at-home moms by salary.com, which asserts that the median salary should fall around $184,820. The good news is that a licensed agent can help you choose a coverage amount that makes sense for your situation.
What type of life insurance is best for a stay-at-home parent?
Insurance companies offer a variety of policy types to suit every individual’s unique situation. For example, term life provides coverage for a fixed period, while permanent life provides coverage through the end of life, as long as premiums are paid. Of course, the best policy for you as a stay-at-home parent depends on your budget and situation.
Term life insurance
Term life insurance provides substantial coverage at affordable rates. Typically, insurers offer 10, 15, 20, and 30-year terms, though terms may vary across insurers. A term life policy can provide you with flexibility as a stay-at-home parent. For example, if you plan to return to work, you can choose a policy term based on that timeline. If you’re ready to have another child and want to return to work when they’re 10, a 10-year term life policy might make sense. Then, you can reassess and adjust coverage as needed once you’re back in the workforce.
Permanent life insurance
Several types of permanent life insurance offer lifetime coverage as long as you keep up with premium payments. They typically offer similar coverage amounts as term life but charge higher premiums because permanent policies can also accrue cash value. While permanent coverage may make sense if you have a child who will need ongoing care into adulthood, its high costs may not be worth it if you have a tight budget.
Staying home with kids? Fidelity Life can help you find the right life insurance policy
As a parent, the idea of leaving your children behind is unthinkable. And the fear can make it challenging to discuss protecting your loved ones in a worst-case scenario. However, with the right life insurance policy, you can take comfort in knowing your family’s needs will be met no matter what. To ensure your loved ones are protected, request a life insurance quote online or speak with a licensed insurance agent who can guide you through the process.
