Valuing a stay-at-home parent’s work
Consider José and Julia. José is a civil engineer, and Julia stays home with the couple’s three children: seven-year-old Ellie and four-year-old twins, Davis and Maia.
Julia provides almost all the childcare for the children, with both sets of grandparents babysitting only occasionally.
She also handles most of the grocery shopping, cooking and home maintenance; chauffeurs Ellie to soccer practice and piano lessons and the twins to preschool; and helps José’s dad with cleaning, cooking and getting to doctor’s appointments, the grocery store and other places.
To be sure, it’s impossible to assign a dollar value to the love and devotion Julia and most stay-at-home parents provide. Yet if Julia were to pass away, the cost would be more than emotional: Ellie, Davis and Maia would require childcare for many years; José likely would need help with cooking, cleaning and getting the children to their activities, not to mention chipping in to assist his father.
The cost of home-work
So while we can’t put a price tag on the intangibles, we can use Life Insurance Needs Estimator Opens in a New window calculator from Prudential to estimate how much Josê would have to spend on the responsibilities Julia currently handles.
To start, Julia spends about 50 hours a week on childcare. This accounts for the time Josê spends both at the office and commuting, leaving Julia as the sole adult in charge. Add about five hours a week for education and helping with homework to her tab — a number that’s only likely to rise as the children get older.
Julia also devotes about 15 hours a week to José’s dad. Feeding her family — including shopping, preparing meals and cleaning up — takes another 20 hours.
Driving the kids to activities? Seven hours a week. Housekeeping, minor home repairs and yardwork? Tack on 25. And while she’s not invoicing anyone for her work, she is paying the family’s bills and managing their finances, to the tune of another three hours a week.
So how does Julia’s 125-hour workweek work out financially? Her family likely will need her to continue caretaking for another 15 years. She’ll keep handling household chores for about 20.
But if Julia were not there, our calculator Opens in a New window says Josê could estimate having to spend some $71,000 a year to hire others to handle his wife’s responsibilities.
How life insurance can help
No matter how you crunch the numbers, outsourcing stay-at-home parents’ routine jobs would crush many budgets. For instance, Care.com reports that the annual cost of childcare in the Austin, Texas, area, where José and Julia live, ranges from $10,561 per child at a daycare center to $30,734 for a nanny. These numbers are slightly higher than the national averages ($10,468 and $28,905, respectively).
Of course, it’s unlikely a surviving parent would outsource every job his or her spouse previously handled. They’d probably take on more household chores, or simply let some slide. Even so, the calculator estimates the tangible value a stay-at-home parent contributes to the family — and highlights the importance of having life insurance for that parent.
Julia and José, for instance, would want to consider about $1.2 million in life insurance for Julia, according to results from the Prudential Life Insurance Needs Estimator calculator. This would largely cover the value of her responsibilities until the twins turn 18.
If you’re a stay-at-home parent and you expect to go back to work once your children reach a certain age, consider a policy that includes a “guaranteed insurability” rider (aka, “guaranteed purchase” or “guaranteed renewable term,” among others). These options enable most policyholders to buy additional coverage at regular intervals without undergoing more medical exams. With some policies, the riders end at a certain age.