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Do Stay-At-Home Parents Need Life Insurance?

Wednesday, November 30, 2022

Not all families have the opportunity for one parent to stay-at-home whether that’s due to financial constraints or just a lack of desire to do so. But for those who do have a stay-at-home parent … do they need to have life insurance? Since they don’t technically have an income to replace, is it even worth it? The answer is yes! Here, we’ll talk about why stay-at-home parents absolutely need life insurance.

What is Life Insurance?

Let’s first cover the basics. Life insurance is intended to provide financial support for the people who rely on you financially if you were to pass away. Usually, it is recommended to take a look at your income, debts, and monthly expenses to determine the amount of life insurance coverage that you should have. In the case of a stay-at-home parent, there are a lot of factors to consider to determine exactly how much coverage is needed. 

A Stay-At-Home Parent is “Worth” a Lot

If you’re a stay-at-home parent, you may not technically have an income you bring in and may not have debts or monthly expenses that you are responsible for personally. However, if you are in a partnership where the other works and you stay at home, they do rely on you (probably a lot!) to make sure all those other things can be paid. 

A stay-at-home parent is a valuable asset to any family – consider the jobs a stay-at-home parent typically takes on:

  • Child Care 
  • Chef
  • Housekeeper
  • Landscaper/Gardener
  • Dog Walker/Pet Sitter
  • Driver
  • Tutor/Teacher

If the stay-at-home parent who keeps the household running smoothly were no longer there, who would do these jobs? The working parent would either have to take up these responsibilities themselves or hire others to complete these jobs for tens or even hundreds of thousands of dollars per year. 

This is one of the main reasons why life insurance coverage is so important for a stay-at-home parent. Even if they don’t technically bring in a second income, it would cost a lot to replace them. 

stay-at-home parents

Why Else Would a Stay-At-Home Parent Want Life Insurance?

Maybe you are in a situation where you already employ people to handle some of the household responsibilities. That doesn’t mean you shouldn’t consider life insurance! Outside of lost income, a stay-at-home parent might need life insurance to:

Provide for Children

People with children need life insurance since children depend completely upon their parents for financial support. Losing one parent would be terrible, but if both parents were to pass away, the kids would need a lot of money to stay afloat into adulthood. Life insurance will help to set them up for success and make a tragic situation slightly more manageable. 

Burial Costs

Burials are expensive and, if the stay-at-home parent were to pass away, it might not fit in the family’s budget to be able to afford this unexpected expense. While the family is grieving the loss of that parent, life insurance can help make sure that financial strain is not an additional stress factor for the family. 

In Case of Divorce

Let’s face it – most people don’t plan on getting divorced, but it does happen. If you lock in a life insurance policy while you’re younger, you can be eligible for a cheaper rate. You’ll have it in your back pocket if your marriage dissolves and you become solely or primarily responsible for your finances. 

stay-at-home parents

Should a Stay-At-Home Parent Get Term or Whole Life Insurance?

A term life insurance policy may be the best choice for a stay-at-home parent as it is more affordable than a whole life policy and it’s intended to cover a specific span of time. Your span of time could be for how long you expect to be a stay-at-home parent or expect to be responsible for your family’s debt

While a whole life insurance policy can be a good choice for people who can afford it, it requires a commitment to pay a larger premium for your entire life. When you’ve paid off your debts or your children are older, you may no longer need life insurance

How Much Life Insurance Does a Stay-At-Home Parent Need?

The amount of life insurance coverage a stay-at-home parent needs depends on the situation.

If you have very young children, you likely need to have more life insurance since they would be financially dependent on you for a longer period of time. If your children are much older or you have very little debt, you may need less.

Generally speaking, the life insurance policy should be at least enough to cover the jobs that would need to be hired out if that parent passed away, but could be more if your family has a lot of debt or if you can afford more coverage. 

If the stay-at-home parent previously worked or is planning to return to work, you can use that as a figure to determine how much income would need to be replaced. Ultimately, there is no one exact “right” answer; just think about what your family would need financially to go forward without life turning upside down. 

If you’re not sure how much life insurance coverage you may need, please reach out to us for customized recommendations. At Independent Insurance Associates, we care about making sure your family is protected from financial hardship.