One of the primary reasons to buy life insurance is to help replace your income if you have loved ones who count on you for financial support. But if you’re not working at a paying job, should you even bother getting coverage? In a word, yes.
Because couples often assume that only the income-earning parent needs life insurance, they often skip out on coverage for the stay-at-home parent. It’s a mistake, though, to overlook the financial support that a stay-at-home parent provides.
How Stay-at-Home Parents Provide Financial Support
Although stay-at-home parents don’t bring home a paycheck, they provide substantial support for their families. If they weren’t around to take care of children, make meals, run errands, or manage other household tasks, someone would have to be hired to fill those roles.
Salary.com estimates that the median annual salary for all of the jobs that stay-at-home moms perform is $178,201. Granted, you wouldn’t necessarily have to hire someone to handle some of the jobs, but you would have to pay for daycare or a nanny if something were to happen to the stay-at-home parent in your family. And that’s a pretty hefty expense by itself. With the average weekly cost for a child care center at $215 in 2019, a family could pay an average of $11,180 to $29,380 a year per child for childcare. And child care costs continue to rise over time.
That’s a cost the working parent would have to shoulder if something happened to the stay-at-home parent. If that parent had ample life insurance, the death benefit could cover the cost of childcare so the family’s finances wouldn’t take a hit. When calculating how much life insurance coverage a family should purchase for a stay-at-home spouse, look at how much it would cost to pay others to perform functions currently handled by them.
Other Reasons to Consider Life Insurance
Not only will a life insurance payout provide the surviving parent with the funds to cover child care costs, but also it will help cover final expenses. The median cost of a funeral with burial is $7,640, according to the National Funeral Directors Association. This does not include cemetery, monument, or marker costs. Plus, there could be lingering medical bills or other expenses that need to be covered.
In addition to providing a financial safety net, the stay-at-home parent might also want a life insurance policy to leave a legacy for the children. By putting life insurance in a trust for your children, you can pass on an inheritance to them.
And while it’s not a reason that people buy coverage, having life insurance in case of a divorce is valuable. It’s better to get coverage while you’re young and healthy because you can qualify for a lower rate no matter what your reason is for buying coverage. If a divorce happens later, either parent without a policy might find it difficult to find affordable coverage at that point—or even get coverage if she or he has developed health issues.