Odds are, you’ve been told that life insurance is an important tool for protecting your loved ones if you — and your income — were suddenly gone. This coverage can help support your family in your absence, paying for the things that your earnings would have gone toward.
But what if you don’t have an income because you are a stay-at-home parent? Do you still need life insurance coverage and, if so, how do you calculate how much you need without a salary to base it on?
Unfortunately, many families fail to purchase life insurance coverage for the stay-at-home-parent. That might be because it’s not being offered through an employer, or because stay-at-home parents simply don’t have an income to replace.
But the reality is that life insurance coverage is just as important for the parent who stays home as it is for the parent who has a career outside of the home. In fact, in many cases, life insurance might be even more important for the homemaker.
Here are five key reasons to buy life insurance coverage for the stay-at-home parent in your household.
Choosing to stay at home, especially if you’re raising small children, often means giving up the opportunity for a paycheck. But that doesn’t mean you don’t bring significant value to your household, which would be very expensive to replace.
If you were to pass away today, what sort of tasks and responsibilities would your family need to hire someone for? Generally, stay-at-home parents cover things like:
Transportation to and from school
Homework and tutoring
Household management, including making appointments
Would your significant other be able to manage all of these household tasks on their own if you were to suddenly pass away? And could they do it while still earning their full income to support your family?
Do you and your spouse share any sort of debt? Whether you have joint credit card balances, a home mortgage, auto loans, or are working to pay down shared personal or student loan debt, life insurance can help take that burden off of their shoulders if you pass away.
Regardless of your family situation or how old your children are, your loved ones would be responsible for your final expenses if you were to die. This could include medical bills, funeral arrangements, a burial, and the like.
Life insurance coverage can help keep your family from shouldering such an unexpected burden. Even if you don’t need a significant amount of life insurance, buying enough coverage for final expenses can be a caring move.
Some life insurance policies offer protection even before you pass away, through certain living benefits riders. If you were to become permanently disabled or be diagnosed with a terminal illness, such as cancer, these riders can grant you access to a portion of your policy’s death benefit while you’re still living.
These funds can then be used to pay off medical bills, cover in-home care needs, or even just enjoy your remaining time with your family, without having to worry as much about making ends meet.
Life insurance can also be a great tool for leaving an inheritance behind for your kids.
Even if your significant other could manage household expenses on their own, were you to pass away, the fact is that you would still be gone. A life insurance policy can help you create a legacy that lasts and would keep your loving memory alive for many years to come.
You could purchase life insurance coverage that would pay for your children’s higher education, cover their future weddings, give them the down payment for their first home, or even put money into a trust for your future grandchildren, when the time comes. Even if you aren’t able to be there for these important milestones, you can still provide your children with the loving support they will need.
The most basic rule of thumb when calculating life insurance needs is to multiply your annual salary by 10. But if you don’t have a salary, how do you figure out how much life insurance you need as a stay-at-home parent?
Even if you don’t earn a paycheck outside of the home, you’ll still be able to buy enough life insurance coverage to protect your family. Generally, though, you’ll be limited to the same amount of coverage that your working partner carries.
This means that if your significant other doesn’t already have life insurance, they will also need to apply for a policy in order for you to qualify as the non-working parent.
First, consider how much it would cost to physically replace you.
Of course, no one person (or even a team of persons) could actually replace you, as far as your family is concerned. But if your loved ones needed to hire out to replace the everyday tasks that you handle, how much would that cost? (And how long would they need to do so?)
Take into account all of the examples mentioned above: child care, transportation, grocery shopping, meal planning and prep, cleaning, lawn services, etc. The more children you have, and the younger your children are, the more coverage you should buy.
Consider the immediate financial burden that your loved ones would take on. Buy at least enough coverage to pay for funeral and burial expenses, cover your health insurance deductible (in case of medical bills), or manage immediate childcare costs.
As parents, we want the world for our children… and we want to be there to see every step of the process.
But if you absolutely couldn’t be there, what would you want to provide for your kids in your absence? Think about the legacy you want to leave behind and what your hopes and dreams for your children would be. You can use the right life insurance policy to create a safety net for these.
No one ever wants to think about their own mortality, especially once you have children. However, buying life insurance can be one of the most thoughtful things you can do for your kids, whether you earn a salary or provide invaluable services to your family as a stay-at-home parent.
Life insurance can offer those you love the financial protection they would need if you were unexpectedly gone tomorrow… with the hope that your coverage is never actually needed.
Not sure where to start in your life insurance-buying journey? Fiona can help, in partnership with LeapLife, linking you with a variety of trusted and highly-rated carriers. They offer an easy and comprehensive way to get matched with personalized life insurance policy quotes, so you can find coverage that meets your family’s needs and budget.
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