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Why Stay-At-Home Parents Need Life Insurance

Jul 20, 2018 3 min read Ilana Polyak

Key Takeaways

  • Calculate the monetary value of what you do.
  • Life insurance helps your loved ones as they recover from your loss.
  • What is term life insurance? An often cheaper way to protect your family.


The main purpose of life insurance is to protect a family against financial hardship following a death. But it’s often not just a breadwinner who needs to be insured. Stay-at-home parents, though they may not bring home a paycheck, also need to think carefully about how their family will manage without them. They still must ask, “How much life insurance do I need?”



These parents ably care for children, cook, clean, chauffeur, shop, pay bills and perform many other tasks, all services that would need to be replaced in the  event of a death . And there are many different types of life insurance, so weigh your options to help protect your family.   

Major financial contribution

Just how much is the contribution of a stay-at-home parent worth? More than you might imagine. According to a survey by Salary.com Opens in new window, the average stay-at-home mom works 96 hours a week. If she charged for each of the jobs she did, this mom would earn an annual salary of $162,600.

As previously noted, it’s not just childcare — the cost of which is staggering in and of itself — that stay-at-home parents provide. Among the highest-value jobs they perform are acting as psychologist, facilities manager, staff nurse and chief executive officer of the home.

How much life insurance?

Financial professionals recommend a life insurance policy that’s 10 to 20 times an annual salary. However, when you’re not bringing home a paycheck, it can be hard to calculate the right amount. Most life insurance companies will allow a stay-at-home parent to purchase a policy that’s equal to what’s carried by the family’s breadwinner.

At the very least, your insurance should be sufficient to allow the surviving spouse to maintain the household while managing work.

Consider the cost of childcare. Full-time care for an infant at an accredited center can run as high as $20,000 per year, according to the analysis by Care.com Opens in new window. But even older children may require after-school care or activities during school breaks.

A spouse who works long hours and travels a lot needs even more assistance.

Families suffering the loss of one parent may incur other expenses, too. For example, the working spouse may need to take some time off to help children work through their grief. Or the duties of single parenthood may be so overwhelming that pricey takeout meals become a regular part of the family budget — something that may not have occurred when there were two parents in the house.

A silver lining: The vast majority of stay-at-home parents Opens in new window are women,  and women typically pay less for their life insurance policies, given their longer life spans.


Consider the options

There are two basic types of insurance.

  • Term: A term life policy is in place for only a set number of years, such as 15 or 20, and premium payments stay the same as long as the insurance is in place. Consider a policy with a term that can last until your children leave home. A term life policy is the most affordable way Opens in new window to get life insurance. A 30-year-old non-smoking woman in excellent health can obtain a $250,000, 20-year policy for less than $25 a month.
  • Permanent: Permanent life insurance can provide protection for your entire life. While you’re paying your premium, the policy can accumulate cash value, which you can borrow against if the need arises, or it can be used as a source of retirement assets. Remember, any loans that are not paid back can reduce the policy’s death benefit. Permanent life insurance, though pricier than term, can also be an excellent way to provide protection for a special needs child . You can use the policy to fund a special needs trust that can provide financial assistance to the child when you are no longer there. Using a trust — rather than naming your child as a beneficiary — allows the child to still be eligible for government benefits.


What you can do next

It can be tough to put a price on all that a stay-at-home parent does. But if you were to hire someone else to perform those same duties, you’d quickly see the significant financial contribution these parents make. While nothing can replace a loving spouse and parent, life insurance can help a family cope financially in the event of a difficult loss.


Consult your financial professional regarding your particular circumstances.


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