Life insurance is a very important investment, as it protects your family’s financial stability after you pass away. As a stay-at-home parent, you’re an integral part of both your child’s development and the stability of your household. In addition, a stay at home parent is providing a high degree of value from the childcare duties that they are performing. Because of this, it’s absolutely crucial that you have a life insurance plan in place.
Choosing life insurance can be very difficult, as there are so many options on the market and so many different ways to customize your policy. It can also be difficult to decide how much coverage you should buy as a stay at home parent. Here’s what you need to know about purchasing life insurance as a stay at home parent.
Why Do Stay-At-Home Parents Need Life Insurance?
In a two-parent household, it’s almost a given that the breadwinning parent should have life insurance. This life insurance can essentially replace their income for a period of time while the rest of the family gets back on their feet. The insurance policy will also pay for the cost of a funeral as well as any existing mortgage debt, and fund other expenses such as a child’s education or retirement. It is less obvious to some people that a stay at home parent also needs coverage to help the family financially if they pass away.
Even though stay-at-home parents don’t bring in an income, they still need life insurance. This is primarily because they provide essential childcare and homemaking services. If the stay-at-home parent were to pass away, the family would need to pay to replace these services, which can be costly. The life insurance money can pay for the cost of daycare as well as help with cooking, cleaning, and shopping. Additionally, the death benefit can cover the costs of a funeral and any other associated costs. The love and care that a stay-at-home parent provides is invaluable, which is why it’s so important to have a reliable life insurance policy as a stay-at-home parent.
If a stay at home parent is planning on returning to the workforce at some point, they may also want to obtain coverage before they earn income. By applying for life insurance when you are younger and healthier, you are able to guarantee coverage and also lock in the best rates. If you wait longer to buy a policy, you may become less healthy and pay way more for coverage, or a serious health issue that prevents you from obtaining any life insurance coverage at all may arise.
How Much Coverage Do I Need as a Stay-At-Home Parent?
Determining the amount of coverage that a stay-at-home parent needs can be tricky. The costs of child care vary in every state but can add up very quickly. To determine the dollar amount of your policy, you’ll need to look at the additional expenses your family would incur if you pass away. This means adding up the costs of child care as well as help with cooking, cleaning, and other household chores. You’ll also need to consider the age of your children – young kids are going to need much more help than older children would.
You’ll also need to factor in any other expenses that your family would be responsible for in the event of your death. This will include the costs of your funeral as well as additional legal expenses that come up as a result of your death. If you have any existing debt, including student debt, credit card debt, or something else, you’ll also need to make sure that your policy can cover it. Adding all of these expenses together can help you determine the ideal death benefit amount for you. As a simple number, a general rule of thumb is to buy between $300,000 and $500,000 0f life insurance for a stay-at-home parent. Here is a life insurance calculator meant to help a nonworking parent decide how much coverage they may need.
What Types of Life Insurance Policies Are Available?
There are many different types of life insurance policies to choose from. The most common choice for stay-at-home parents is a term life insurance policy. Term life insurance policies last for a designated period of time, usually anywhere from 5 to 30 years. After this period has ended, you’ll need to reapply for coverage if you want to continue to have life insurance.
Many stay-at-home parents will purchase a life insurance policy that only lasts until their child turns 18 years old. Term life insurance is the most affordable form of life insurance, and by purchasing a limited amount of coverage, you can save on your monthly premiums. Term life insurance is also generally the easiest form of life insurance to qualify for.
Additional Coverage Types
If you want additional coverage, there are other types of life insurance to consider as well. Whole life insurance is much more expensive than term life insurance but lasts for your entire life without expiring. Whole life insurance also has a cash value component that you can use to bolster your finances if you need more purchasing power. If you want an insurance policy that doesn’t expire and has a high cash value, you might find that it’s worth it to spend more on a whole life policy.
Another similar option is a universal life insurance policy. This is similar to whole life in that it doesn’t expire and has a cash value component. However, you can adjust the death benefit and your monthly premiums to suit your needs without getting a new policy. The cash value component can also earn interest based on the current stock market rates. This gives you an opportunity for further growth. Generally, it doesn’t make as much sense for stay-at-home parents to get whole or universal life insurance policies, as they cost more and you likely don’t need the full amount of coverage that they provide.
If you would like you and your spouse to be covered under the same policy, you may consider a survivorship life insurance policy. This is a policy that covers two individuals and functions similarly to a universal life insurance policy. However, it only pays the death benefit when the second person dies. This means it isn’t the most practical option for stay-at-home parents, as it won’t provide a payout to help the other person with childcare.
What Should I Look for in a Life Insurance Policy?
Once you’ve decided how much coverage you need and what type of policy you want, it’s time to start shopping for your life insurance. With so many different options, it can be difficult to narrow down the right policy for your needs. You should always get quotes from several different companies to see which one is going to be the best for your needs. You might be surprised by which companies can give you the best rates. You may also want to consider working with an independent insurance agent, you can help you find insurers that you may not have heard of before.
The next thing to look at when choosing your insurance is the application process. If you are in good health, getting a life insurance policy shouldn’t be difficult. However, if you have a chronic injury or illness, it can make the process harder. Many insurance companies require you to answer written questions about your medical history and take a physical exam. However, not all companies will require the in-person exam.
It’s also important to look at the financial strength of the insurer when making your selection. You’ll want to make sure that your insurer is financially stable enough to pay out death benefits regardless of the current economic climate. You can check the company’s financial strength ratings with AM Best, a company that assesses the reliability of insurers and other financial institutions.
Finally, you’ll want to make sure that the insurer provides good customer service. Ideally, you’ll be able to get a hold of them via phone or email whenever you need. Many insurance companies also offer the option to view your policy and pay bills online, which adds even more convenience. These are all key factors to consider when choosing your insurer.
Final Word on Affordable Life Insurance for Stay-At-Home Parents
Life insurance is incredibly important for stay-at-home parents, so you’ll want to make sure you don’t skip it. An affordable term life insurance policy can provide invaluable financial security for your loved ones in the unlikely event of your passing. To find a reputable insurer to buy life insurance coverage from, consider one of the top 25 life insurance companies in the United States.
