Stay-at-Home Parents and Life Insurance: Is It Necessary?

These days, the costs of child care have created a brand new generation of stay-at-home moms and dads who work hard every day to take care of children and household duties. When it comes time to purchase life insurance, however, these people often believe that they don’t need much coverage if any at all. Here is a rundown of how life insurance figures should be calculated for stay-at-home parents and why it is so important.

Employer-Provided Options

In some cases, stay-at-home parents may receive some life insurance from their spouses’ employers. These individuals often feel as if this coverage alone is enough because, after all, there wouldn’t be any income to replace. However, what people fail to realize is that even when they do not work outside of the home, they are providing valuable services that would be very costly to obtain following their deaths. As such, it is important to consider these costs and factor them in whenever it comes time to purchase a policy.

Value of Policies

For a stay-at-home parent who is covered under his or her spouse’s employer-provided life insurance policy, the value of the policy is generally between $20,000 and $30,000 with a maximum of around $50,000 according to national surveys. While this might seem like enough since a stay-at-home parent has no true income, it is important to consider the value of the services that are being provided in the home. Child care and other domestic services aren’t free in today’s economy, and these are things for which the spouse of the decease will pay – and pay a lot, according to various sources.

Child Care

The average American family has two children, and factors such as the ages of these children and the states in which they reside will have a huge impact on the cost of child care. For instance, while the annual cost of infant care in Mississippi was under $5,000 in 2010 according to the Child Care Resource and Referral group, it was over $10,000 in the District of Columbia in the same year. In Florida, it was estimated that child care for a single infant in 2010 was about $7,000 for a year, and inflation has likely driven up these costs. Plus, if there is more than one child in the household, these costs raise significantly.

 Other Domestic Services

Aside from saving a family more than $10,000 per year in child care services in the case of a two-child family, a stay-at-home parent provides other domestic services that are of great value. They drive children to practices and doctor’s appointments, they provide housekeeping and laundry services, they prepare meals, and they provide a support system to the entire family upon which it is impossible to place financial value. According to a poll by Salary.com, the economic value of a stay-at-home parent tops out at an average of more than $100,000 per year.

If you are a stay-at-home parent, your life insurance policy is just as valuable as your working spouse’s. A good rule of thumb is to purchase a policy large enough to make up for any financial burden after your passing and then some. After all, these funds will go to your surviving spouse and children in order to help them pay for college and other expenses. You can find affordable policies and information at www.cheapinsurancefl.com.