Obviously, for most people, the main reason to take on a life insurance is to help your loved ones. It will help replace your income for the people who depend on you financially. But, if you are not working on a paid job, and a stay-at-home parent, should you have a life insurance ? Should you bother to take on one? The answer simply is yes. This article sheds light on the Stay-at-Home Parents Life Insurance.
Jason Hill, the of CFAInsure.com and CEO of Client Focused Advisors and has this to say about that. He says that couples normally think that only working parents needs life insurance.
It’s wrong to undermine the financial support that stay-at-home parents provides.
Hill’s wife is a stay-at-home mom. He says, that replacing the job done by my wife at house, will cost a fortune for me.
Read the rest of the article to about the need of a Stay-at-Home Parents Life Insurance.
Stay-at-Home parents provide financial support. But, how?
It is true that, stay-at-home parents don’t not bring back money home. But, they provide support to their families. Imagine, what happens if they are not at home. Who will make meal, take care of children and do household chores ? Then, you will have to hire someone to do them.
Salary.com calculates the median annual salary for the tasks that stay-at-home parents perform. It is around $178,201. I emphasize that you would not want to hire someone to do some of the tasks that salary.com takes into account. Such as logistics analyst, judge and social media specialist.
But, probably you will have to pay for a nanny if the stay-at-home parent in the family doesn’t work. Therefore, it is quite a large expense.
In 2019, the average weekly cost for a child care center was $215. That was according to the Care.com’s Cost of Care Survey. Also, the average weekly cost for a nanny was $565. The weekly average expense for after-school care was $243. Taking note of all these figures, we can calculate the amount a family pays annually for child care. It is nearly $11,180 to $29,380. Moreover, child care costs always rise over time.
So, that is the cost, the employed parent have to pay, if the work-at-home parent is not available. But, if the stay-at-home parents had a life insurance, things will be much easier. Therefore, the death benefit can cover the cost of childcare. This way, it won’t be an issue to the economy of the family.
Why a stay-at-home parents life insurance is of need?
A life insurance will not only pay for the surviving parent with funds to pay for child care cost. It will also help to cover final expenses. According to the National Funeral Directors Association, the average funeral burial cost is $7,640. This is without monument and cemetery costs. Additionally there can be medical bills and other expenses waiting to be paid.
The stay-at-home parent may also want a life insurance to place a legacy for his children. Stephan F. Lovell, president of Lovell Wealth Management, says so. So, by taking on a life insurance in a trust, you may pass an inheritance for your children. Click here to learn more about how to take on life insurance in a trust.
Specially, in case of a divorce, having a life insurance is very valuable. Lovell says, it is good to get insurance when you are young and healthy. That is because, then you can qualify for a lesser rate, regardless the reason you are buying an insurance. If a divorce happens in the later ages, parent with or without insurance will feel difficult to afford an insurance then. Also, it will be difficult for the parents to get a cover, if he has developed health issues.
Don’t know what a life insurance is? Read out this article to learn.
Types of life insurance stay-at-home parents should buy.
Two main types of life insurance are available. They are named as term life insurance policies and permanent life insurance policies. A term life insurance policy covers a certain period, may be 10-30 years. A permanent life insurance provides lifelong coverage. You can choose the desired type considering your family’s economy and targets.
Permanent life insurance and it’s case
A permanent life insurance policy costs more than a term life insurance policy. It is so, whether it is a whole life or universal life policy.
Permanent life insurance is more suitable for higher income earning families. These families will have covered other planning bases. They might have a maxing out retirement savings, a saving for children’s school education and an emergency fund.
This type of insurance policies build cash values. It is one benefit of a permanent life insurance policy. You can use the cash value in later life, if it builds enough cash. Look at this example. You can take on a policy for retirement income. This may be attractive for stay-at-home parents, as they don’t have a workplace retirement savings plan.
Lovel says, that cash value policies give stay-at-home parents planning adaptability in later life.”
If a young family is struggling with other expenses, this will be not good. Although a permanent life policy will build enough cash value it can be not good for such a family.
A term life policy normally offers a term life conversation feature. So, you can change to a permanent life policy when needed. Keep that in mind, If you cant afford to buy a permanent policy now.
You can take advantage of that option, if you get a bigger household budget later.
Term life insurance and it’s case
Hill recommends that stay-at-home parents should buy a term life insurance policy. That is because, it is an affordable method to get the needed protection. Consider the following example. A healthy 30-35 old woman takes on a 20 year term life insurance policy. She will then get a $500,00 death benefit. That is, for a month, about $20-$30.
You can select a desired term. The term can even cover years, until all of your children graduate. So, you know that you will get the funds to pay if something happens to you, while they are young,
Buying a stay-at-home parents life insurance
Working with an independent insurance broker and getting quotes while comparing policies from different insurance agencies is the best. If you want to do it yourself, you can find for the best policy available for the best price.
You have to provide many information about yourself when applying for an insurance. So, then the insurers can calculate the rate.
If your spouse has a life insurance, it may not block your ability to get a cover, although you lack income. Hill says this. He says that, you will only get into trouble, if the employed spouse doesn’t have a life insurance or isn’t applying for one.
If you are trying to get more coverage than your spouse has, it will be a trouble. Normally, insures issue polies for the dependent spouse worth of 75% to 100% of an in-force policy of the working spouse.
If you face problems while getting an insurance, it is good to have an independent insurance broker. So, the broker can write to the insurer. In the writing, he can describe the reason for getting the life insurance even you are a stay-at-home parent.