Let’s discuss the need and size of life insurance policies for stay-at-home parents, along with what happens should tragedy strike and any payout is received in case something catastrophic takes place.
Parents Who Stay At Home: Do They Need Life Insurance?
Life insurance policies designed specifically to cover stay-at-home parents provide funds that cover all the jobs held before their death, rather than replacing income streams with replacement income streams.
No one can ever fill the shoes of an SAHP, yet their duties can still be performed using funds from their life insurance settlement. We understand this sentiment well, yet using this money to hire someone who will cover these duties would provide relief to their surviving spouse.
Maintaining your family under trying conditions is of utmost importance. While nothing will ever return to normal, hiring someone temporarily to assist can ensure no one’s needs go overlooked – that is what counts most!
When, Then, Should A Stay-At-Home Parent
If you just graduated college without debt, buying life insurance might not be necessary just yet; but if you plan to have children soon after getting married and purchasing one is wise.
No matter the length of time it takes for a child to arrive, you are protected. They often arrive earlier than anticipated and on their own schedule.
How much life insurance do parents who stay at home need?
Concerns around term life insurance coverage for parents staying home include how much coverage should be bought. Since every family has unique needs, no general rule exists for how much term life coverage to get. As a guideline, 15-20 year policies ranging between $250,000-400,000 are suitable; once children have left home they no longer require coverage. You can use our term life calculator to estimate how much coverage you require.
Caregiver, education and household responsibilities should all be given careful consideration, with your decision potentially leading to higher insurance payments for additional expenses.
Additional Considerations For Life Insurance
Life insurance payouts provide not only enough funds for child care and funeral bills, but can also assist the surviving parent in paying them. According to the National Funeral Directors Association, an average funeral with burial can cost $7,848 with costs such as cemetery, monument or marker not being included; unpaid medical bills and other costs might still need to be addressed as well.
Stephen F. Lovell, president of Lovell Wealth Management suggests that stay-at-home parents might consider purchasing life insurance to leave an inheritance to their children while providing financial protection. You can leave an inheritance by placing life insurance into trusts for them.
Life insurance coverage can be invaluable during a divorce, even though it isn’t the primary driver behind its purchase. When purchasing life insurance for this purpose, the sooner you do it the better, as early purchases could qualify you for discounted rates, according to Lovell. Otherwise, should a later divorce occur, any parent without coverage could find themselves struggling to find reasonably priced policies–or even coverage in the form of health issues–at that point in time.
Purchasing Life Insurance
Employ an independent insurance broker for assistance; they can compare policies from various insurance providers and secure rates on your behalf. Otherwise, do it yourself and compare policies until you find the best offer.
As part of the application process for life insurance, insurers require you to submit an extensive amount of personal data so they can determine your rate.
If your income-earning spouse already has life insurance coverage, your own lack of income should not prevent you from purchasing coverage. But if the two of you are separately searching for coverage or trying to acquire it, complications could arise.