Do stay-at-home moms need life insurance?
When millions of children had to stay home from school and daycare because of the COVID-19 pandemic, many people were reminded of just how much work goes into caring for and raising a child. A large number of parents ended up dropping out of the workforce in order to supervise their children and help them study from home.
The truth is, all parents are “working” parents—the work of raising a child is just as valuable and important to society as the work parents do to earn money. That is why when families don’t have a “stay-at-home parent,” they typically pay for childcare workers to fill this role. The unpaid work of a stay-at-home parent is very valuable in financial terms, which is why these parents may want to consider life insurance coverage.
Who will handle childcare and household work if you can’t?
It may be tempting to believe that only the parent who earns money needs to be covered with life insurance, so that their salary can be replaced if they died.
However, what would happen to the parent who earns most or all of the family’s income if a stay-at-home parent died?
In many cases, the earner parent would have to keep working and pay someone else to provide childcare.
This is a major reason financial experts often recommend that stay-at-home parents get life insurance coverage along with the earner parent. Childcare is a significant cost for many working families, and that is especially the case for a single working parent who is dealing with the grief of losing their co-parent.
It’s important to remember that there are still other financial losses that an earning parent faces when a stay-at-home parent passes away. A stay-at-home parent may do the majority of the housework and repairs. Depending on how demanding the earner parent’s job is, they may then be forced to pay someone to help with these tasks as well.
It is also often the case that a stay-at-home parent had plans to return to work after children get older to help pay for needs like health care and higher education, so when that parent passes away, the family loses their future income.
Finally, the surviving parent may have to pay for the funeral expenses and any medical bills resulting from the stay-at-home parent’s death. According to the National Funeral Directors’ Association, the average cost of a funeral in the United States was about $7,600 in 2019.1
How much life insurance does a stay-at-home parent need?
No matter what your budget for life insurance, some coverage is generally better than none at all because the costs following a parent’s death can be significant.
However, to calculate exactly how much life insurance is needed to cover the loss of a stay-at-home parent, parents may want to start by deciding how many years each child would need paid care if the stay-at-home parent passed away. Parents can check with local daycare centers and other providers to get a sense for potential costs per child.
It may also be helpful to consider any other unavoidable costs that will come with the loss of a parent: for example, help with tasks like cleaning or repairs.
Shopping for insurance
In general, life insurance policies cost less for people who are young and healthy. So, a good time for a future stay-at-home parent to consider purchasing a policy may be when they find a partner they want to raise children with, even if they plan to wait before starting a family.
You may want to get quotes from different companies before making a purchasing decision.
If money is an issue, and parents are seeking just enough coverage to cover the main child-rearing years, they may choose a term life policy that will last until children reach a certain age. Alternatively, parents may choose a whole life policy that will cover them their entire lives as long as they pay their premiums. It’s helpful to know that many term life policies can be converted to whole life policies at a later date.
It’s not fun to think about what would happen to a family if a stay-at-home parent passed away. However, it’s clear that stay-at-home parents bring a lot of support and care to their families that would be costly to replace.
Parents can look out for their children and each other by looking into life insurance options for both the stay-at-home parent and the earner parent. Knowing that you have taken a step to protect your loved ones may even make the hard work of parenting a little less stressful.
1. National Funeral Directors’ Association, “Statistics” https://nfda.org/news/statistics.