Just because you’re not earning a paycheck doesn’t mean life insurance isn’t for you. Let us explain, with three reasons stay-at-home parents need life insurance too.
Find out now: How much life insurance do I need?
Reason 1: Stay-at-home parents add value
The typical thinking around life insurance goes like this: someone who has a) an income and b) dependents needs life insurance to replace the income that would be lost in the event of a death. We’re not questioning that math, but we want to add another category to who needs life insurance: the stay-at-home parent drawing no income.
Aside from using SmartAsset’s handy guide, there’s an easy way to think about whether you need life insurance, and it goes like this: Would my death result in ongoing financial hardship or loss for my dependents? In the case of a stay-at-home parents, the answer is clearly “yes.” Why? Because someone else would have to do what you do now: think childcare, housework, errands, etc. Your partner or the guardian of your children would either have to forgo income to do your job, or forgo income to hire someone else to do it.
Reason 2: Life insurance is back-up for kids
If you’re a single parent you should definitely have life insurance, and if you’re part of a two-parent family, it’s important to make sure both of your lives are insured. That way, if something were to happen to both of you, the people you’ve designated in your will to be your children’s guardians (you’ve done this, right?) will have life insurance money to spend on taking care of your kids. By the same logic, if your friends or relatives have nominated you to care for their children in the event of the parents’ death, make sure both parents have life insurance funds you could draw on.
Reason 3: The climbing costs of childcare and education
Putting a dollar value on your family’s expected need is never simple. But when deciding what size life insurance policy to buy, remember that the costs of childcare and education have consistently risen, year after year. Maybe your spouse’s income covers the kids’ education costs now, but what about when costs are higher down the road? Consider your children’s age when deciding how much life insurance to buy for yourself and your partner. The younger the children, the bigger the policy should be. Whether you want to cover your kids’ private school and college education costs as part of your policy will also impact your life insurance needs.
The most important message to a stay-at-home parent? Value your contribution to the family enough to take out a life insurance policy. Trust us: you’ll sleep better for it.
Photo credit: flickr