Insurance Considerations for a Stay-at-Home Parent
The job of homemaker can be rewarding, and the care a stay-at-home parent provides is invaluable to his or her family. But when it comes to calculating life insurance needs, many families believe that obtaining coverage for the primary breadwinner is sufficient. They often fail to realize that the death of a stay-at-home parent would not only be a tough emotional situation for the family, but it could also create financial challenges for the surviving spouse and children.
Since homemakers do not earn a paycheck, estimating the economic benefit of their contributions to the family can be challenging. Clearly, the cost of the services provided by a stay-at-home parent can be substantial. Precisely what those costs entail depends on the family’s circumstances. For example, if the children are younger, child care costs must be budgeted. If the surviving spouse works long hours, the family may also need to factor in the cost of a housecleaner or landscaper.
The first step in calculating an appropriate amount of life insurance coverage for a stay-at-home parent is to consider how much it would cost to pay others to perform the tasks currently performed by the homemaker.
Here are some examples of tasks typically performed by a stay-at-home parent:
In addition to having to pay for help in these areas, a family that has lost a parent may find that other expenses go up due to pressure and time constraints. For example, the family may dine out or buy expensive convenience foods more frequently. Also, a working parent may have less time to devote to shopping for bargains on groceries, clothing, and other items.
Clearly, replacing the contributions of a homemaker and caregiver would be very expensive, especially considering the number of years it takes to raise a family. Therefore, it makes sense to obtain life insurance for the parent who works at home, not just the family’s main earner. If something were to happen to a stay-at-home parent, life insurance could help the family through the difficult period of adjustment.
Proceeds from a life insurance policy could be used to help cover final expenses or allow the surviving spouse to take a leave of absence from work in order to spend time with the children. A lump sum could also be used to help clear debt. In some cases, the policy money may be used to help pay for child care or housekeeping services after the surviving spouse returns to work. In other cases, it may be possible to save at least a portion of the life insurance proceeds to help pay for future college expenses.
Losing a parent can be devastating. But financial hardship as a result of that loss is not inevitable. Life insurance coverage can help ensure that the surviving spouse is not forced to work long hours or take a second job in order to pay the bills. Instead, the surviving spouse may focus on caring for the children.
It is important to assess your family’s specific needs and prepare accordingly. With adequate life insurance coverage, you can rest assured that your family’s financial needs can be met well into the future.
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