A life insurance policy offers financial protection to one’s family after passing. This serves as a safety net, ensuring that dependable spouses do not face financial strain in the event of the policyholder’s demise. This is especially important for stay-at-home moms who may not have a steady income source. A life insurance policy can be obtained for this, as it can help care for the household and child’s expenses in their absence.
Life insurance for stay-at-home mums
When determining the appropriate amount of life insurance coverage, many people employ an income-based thumb rule. For instance, they may multiply their annual income by 10 to reach a certain coverage amount that they may require.
That said, there is a common misconception that life insurance is only necessary to replace lost income. In reality, the primary objective of life insurance is to protect the family from financial hardships. For stay-at-home parents, life insurance can provide the funds needed to cover the various responsibilities they manage within the household.
While money alone cannot replace the invaluable role of a parent, it can enable the surviving parent to secure assistance for the numerous tasks typically handled by the stay-at-home parent. This additional support can help the family navigate through challenging times and ensure that essential needs are met.
Although life insurance cannot restore normalcy, it can help bridge the gaps by providing resources to address the family’s needs. This support can make a significant difference in maintaining stability during difficult situations.
When should a stay-at-home mum get life insurance?
Life insurance might not be a priority if one is debt-free and just graduated from college. However, once an individual gets married and decides to start a family, that is the time when they must consider purchasing life insurance for the partner who stays back home caring for the child.
Life insurance coverage for stay-at-home mums
Since every family has unique needs, there is no one-size-fits-all response to this question. That said, it’s generally recommended to consider getting a life insurance policy of $250,000 to $400,000 for 15 to 20 years.
Obtaining a policy can be more affordable when one’s younger, so it is advisable to consider getting more coverage. Once the policy term is over, the kids will likely be independent adults, and the need for coverage may decrease.
Coverage considerations
When deciding on the amount of coverage one should purchase, there are five important factors to take into account.
- Education
- Family size
- Household duties
- Childcare
- Career plans
Each of these attributes influences the type of life insurance policy that an individual should consider in order to provide financial protection for their family.
Education
Many families opt for homeschooling their children. In such cases, it is important for both parents to discuss and decide on a plan for the child’s education in the event something happens to the parent who stays at home. Enrolling a child in private school can be very expensive, with an average annual tuition cost of around $12,000 per year for a single child. This amount does not cover additional expenses like extracurricular activities, fees, and supplies.
Number of children
In a large family, there is naturally a greater demand for financial resources. Everything becomes relatively more expensive, from funding vacations to covering childcare, extracurricular activities, and grocery expenses alike. Consequently, having more kids results in the need for a larger insurance policy coverage for parents who are at home looking after them.
Household duties
If the stay-at-home parent cannot carry out household duties, then one may have to look for a person who may take on their responsibilities. On average, a basic housekeeping service typically costs $14 an hour; running a household involves much more than just simple cleaning. Here, having an insurance policy can help one pay for the services to take care of all the house tasks.
Childcare
If something unfortunate happens to the stay-at-home parent, the family must cover childcare expenses. According to reports, hiring a nanny for an infant costs approximately $700 a week, while enrolling the infant in a daycare center can cost approximately $225 a week. Over the course of a year, the total cost of childcare could be about $36,400 and $11,700 for a nanny and a daycare center, respectively, for a single child. These costs can significantly vary depending on the location. So, one must consider this factor while looking for an insurance policy for stay-at-home moms.
Career plans
A stay-at-home parent already carries out an invaluable amount of work, and despite their current duties for their child and household, they may reenter the workforce. Thus, they must consider obtaining life insurance. When they initially return to work, they should secure coverage typically 10-15 times their expected income. Doing so can ensure financial security whether they choose to resume employment or continue as a stay-at-home parent. As one age, the cost of insurance typically rises. Thus, delaying the purchase of a policy until one returns to work is often a misstep. Getting started early can enable individuals to secure a more favorable premium.