It might come as a surprise to some to hear that even stay-at-home parents require life insurance. Since they are not earning a paycheck, why should they buy life insurance? Stay-at-home parents need life insurance as much as working parents do and here’s why:
Stay-at-home parents are responsible for running the house. While one parent is at work, the stay-at-home parent is cooking, cleaning, managing the finances, and taking care of the children, just to name a few. It the stay-at-home parent does not do all of that, the household will suffer.
Yes, an option to this is to hire outside help to take over the role of the stay-at-home parent, but the cost of doing so is a lot. In the event the stay-at-home parents passes away, the working parents will have a lot riding on their shoulders, meaning that they will be responsible for doing everything the stay-at-home parent was responsible for in their lifetime.
By shouldering the responsibilities of the stay-at-home parent, the costs can increase considerably, which is why even stay-at-home parents need to buy life insurance. Here are five reasons why stay-at-home parents need to buy life insurance:
1. Cover Funeral Expenses
In the event a stay-at-home parent passes away, the working parent will need to pay the funeral expenses. You will need to cover the costs of the headstone, burial, and related expenses. For this reason, stay-at-home parents need to obtain life insurance so after their passing, their partner can cover all the related expenses.
2. Pay Off Debts
Most people still have not paid off their student loans and credit cards completely. Therefore, it is safe to say that your partner who stays at home and looks after the house still has yet to pay off their student loan and credit card amount completely. If they pass away, you can use the money to pay of their debts.
3. Increase Savings
You can use the money from the life insurance to pay for your child’s college tuition or the down payment for a house. If you do not need the money right now, you may need to use it in the future. To ensure you have a good chunk of money saved, you need to pay your insurance premiums on time. However, if you do withdraw or borrow money from the life insurance policy, it will reduce the cash value and death benefit of the policy.
4. Life Insurance Employers Offer Is Not Sufficient
Employers do not provide sufficient life insurance to employees. If the working parent passes away, the life insurance they receive may not be enough to sustain the household. If you work, look at the employer’s policy to see the amount of life insurance they receive. Usually, the life insurance that is part of the work benefits package is normally one to times their yearly salary or a limited amount.
If you are wondering how much life insurance is sufficient, it is recommended that life insurance needs to be around 10 to 20 times the yearly salary. In some cases, the employer may extend the life insurance to the stay-at-home parent and if they do, you need to take full advantage of them. However, stay-at-home parents still need to obtain life insurance of your own.
5. Life Insurance is Affordable
Even though it may seem like life insurance is not affordable, it is more affordable than you might have thought. You need to figure out the amount of coverage you need, and it takes only a few seconds for you to calculate that amount.
Make things simpler for yourself and find an online insurance calculator. Once you have an estimated figure in mind, you can take the next step and obtain life insurance form an insurance company. You can also ask yourself questions to come to a better understanding on how much life insurance coverage does a stay-at-home parent really require?
How Much Life Insurance Does a Stay-at-home Parent Need?
Stay-at-home parents need to ask themselves the following questions:
- Do you take care of any aging or special needs relatives?
- Does the working partner want to take time off work? How much would it cost them to take time off work?
- How long until your children move out of the house? How many years do you need to pay for their expenses until they move out or start earning for themselves?
- How long would you require childcare for? This includes before and after childcare.
- How much money do you need to cover these costs while you continue to fund your financial goals? Financial goals include college savings, retirement savings, and more.
- What does your budget look like after you add up all the costs?
- What types of burial services would you want for yourself?
- Would you want to move somewhere else so you can be closer to your family? Would you be willing to make certain lifestyle changes?
If a stay-at-home parent is considering taking out life insurance, they need to determine how long the life insurance policy should last. Usually, a stay-at-home parent’s insurance policy should last until their last child it out of the house. You should also consider the long-term plans of your family when deciding on the duration you want the life insurance policy to last.
stay-at-home parents can discuss it with their partner to determine the amount of coverage they might need. Once they have that figured out, they can proceed to buy life insurance. Most stay-at-home parents do not realize the importance of having life insurance, which we hope to change with this post.
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