When you have children, life insurance is one of the first things you should think about for your financial future. Life insurance is a wonderful way to make sure that your family will always have a way to take care of the finances if something were to happen to you.
It makes sense that the working parent should have life insurance; your family relies on that income and that income would need to be replaces somehow.
Stay-at-home parents have lots of value and even though they may not bring in an income, but all the things they do every day would cost money to replace. Life insurance for a stay-at-home parent would help your family handle costs to handle the every day expenses.
From a survey done by salary.com, in 2016 the base salary for a stay-at-home mom (stay-at-home dads too) was $48,509 (40hr work week). Overtime hours calculated to about 52hr, which averaged to $94,593; totaling a salary of $143,102.
As you can see the value of a stay-at-home parent is very important and therefore having a life insurance policy would be beneficial.
Let’s look at what would be needed if it were to be replaced.
- Childcare: the main job of a stay-at-home parent is to care for the children. And anyone who has children knows that it’s a lot of work. Replacing this job would require one of two things: the working parent would have to reduce his or her hours or paying for childcare. Either one of these options is going to cost money. Paying for childcare wasn’t in your budget before.
- House Work: cooking, cleaning, laundry, dishes, shopping. The amount of work that goes into maintaining a home a keeping everyone well-fed is a big deal. In most cases, some of this would be taken over by the working parent, but for the sake of everyone’s sanity it makes sense to pay for some help here.
- Transportation: children have school, doctor appointments, play dates, baseball practice, dance class and more. Until they can drive themselves, someone will have to get them to all the extracurricular activities.
- Adjustment Time: The death of any parent would make for some difficult adjustments, both financially and emotionally. Having extra money available would make all that just a little bit easier. Life insurance proceeds could help the surviving parent take some time off and could also be used for counseling if needed. It could give the surviving parent the option to work fewer hours, either temporarily or permanently. No matter what the adjustment period as the family adapts to the new circumstances, life insurance provides the money that would give your family the time and flexibility to adjust as you need without worrying about money running out.
- Debts: like a mortgage, might be jointly held by you and your spouse. This type of debt may be more difficult to pay off if you are no longer around and a life insurance policy could provide the money to either pay off the debt completely or at least make the payments more manageable. Other debts may be yours alone, in that case the main question is whether you would have to use some of your savings to pay the loan back at death; life insurance again could be an effective way to settle these loans.
- College and Other Long-term Goals: most parents want to save for their children’s education and this is something that may be more difficult without the stay-at-home parent to handle many of the family’s daily responsibilities. Some of the life insurance coverage could be earmarked for those long-term goals. This might not fall into the “need” category when it comes to life insurance, but it could make it a little easier for your family to build the future it wants.
So how much life insurance does a stay-at-home parent need? Simply put, the policy should be able to provide value to replace the work that it would cost if the parent were to pass. Unless you have the savings in place to handle the extra costs we discussed above, a life insurance policy is a terrific way to make sure that the money will be there when you and your family need it most.
The amount really depends on the specifics of your personal situation, but we can give you an estimate to see how much you should get.
As always, we are here to help you through the process. If you have questions or concerns on your current life insurance plan we can help. Our agents are here to help. Frimark/Keller & Associates have helped the citizens of Schaumburg and surrounding areas since 1910. Give us a call today at 847-907-4520.