Many couples assume only income-earning partners require life insurance policies. What about stay-at-home parents or those without employment incomes?
“They may not bring in much income, but their contributions to their families are invaluable – from cooking gourmet meals to helping students prepare science fair projects.” It’s worth protecting these invaluable members of society.”
Term Life Insurance
Term life insurance provides an economical means of providing coverage over an extended period of time, making it ideal for stay at home moms who want to ensure that their families can pay debt, funeral costs and other expenses should they die prematurely. Upon death of an insured individual, term policies typically pay a lump sum benefit payment directly to their beneficiaries.
Life insurance needs depend on a range of factors, from current financial circumstances and long-term goals for families, to stay at home parents’ economic value and their stay-at-home services being difficult to quantify. Experts estimate that families could pay up to $185,000 annually to replace all duties and responsibilities a stay-at-home parent provides their family with.
To determine how much life insurance a stay at home mom might need, it can be useful to calculate how much it would cost them to hire someone else to perform their responsibilities. You can do this by multiplying their annual income by 10 and creating a preliminary coverage estimate. Furthermore, be mindful of outstanding debts or expenses related to everyday household tasks as you make this estimate.
Remember that some life insurance policies include a cash-value component that can be accessed over time, making this feature particularly helpful for families interested in investing their payout. According to financial professional Corey Schneider from Sentinel Solutions, this feature is an effective way of diversifying portfolios and creating additional revenues streams.
Life insurance provides another important advantage by safeguarding co-signers or joint account holders against liability in the event of the death of a stay-at-home parent. This protection may prove especially useful should either spouse plan on returning to work at some point in time.
Whole Life Insurance
People often misconstrue life insurance as being solely intended to replace income, leading stay-at-home parents to forgo purchasing it altogether. Unfortunately, this misconception leaves their families vulnerable in the event of a catastrophic accident or unexpected death. To determine their proper needs for life insurance it’s essential that one consider all of their responsibilities such as childcare, elder care, housekeeping services and even cooking meals on busy weeknights – while these tasks don’t provide financial returns they are essential components to their survival as part of family life.
As such, it is necessary to purchase a policy to cover these costs in the event of their death. A term life insurance calculator is an ideal starting point, enabling users to quickly estimate how much coverage is necessary before working with an agent to select one that is tailored specifically to them.
Whole life insurance provides a more comprehensive solution, providing cash value growth and borrowing against its death benefit, subject to certain limitations. Not only can these policies protect against financial loss but they can also allow individuals to pass on wealth tax-efficiently.
Though it may seem counterintuitive, stay-at-home moms and dads bring significant financial benefits to their households. Their contributions not only benefit children and their surviving spouses directly; but can also relieve burdensome costs related to paying for household services like nannies or tutors as well as home cleaners or lawn services in the event of their unexpected and tragic demise.
Life insurance can be invaluable protection in the face of unexpected events; therefore, all families must explore their life insurance options to make sure they’re adequately covered if something unexpected arises.
Universal Life Insurance
Stay-at-home parents are often overlooked during financial planning processes. Many believe life insurance only makes sense for wage earners; however, its importance should not be underrated as stay at home parents provide invaluable high-dollar services that cannot easily be replaced. They serve as teachers, chefs, chauffeurs, housecleaners, coaches, tutors and project managers for their families which saves both time and money while making an enormous difference to children’s education, social development and overall well being.
Studies by Sentinel Solutions estimate that stay-at-home mothers provide up to $185,000 worth of services annually and they deserve equal protection as those earning income. To determine an approximate figure of life insurance coverage needed for stay-at-home parents, multiply their salary by 10. This number provides an approximate figure for how much coverage should be acquired and is often a great starting point for many families.
Term life policies tend to provide more affordable premiums and can be customized depending on a child’s age and needs. Furthermore, their duration can also be altered as needed.
Permanent policies such as whole and universal life insurance offer investment components, which can build over time and serve as an additional source of income for the policyholder – some even offering tax advantages! To learn more about permanent life insurance options, speak to a financial and insurance professional.
Calculating how much coverage you need requires taking several factors into account, including family size, career plans, childcare and education costs and household duties. If you plan to have additional children, their costs will increase your coverage amount as will extracurricular activities and related costs associated with family growth.
Factor in debt you and your spouse share, as well as co-signers on credit cards or loans who would become responsible if either of you dies; life insurance provides protection.
Variable Life Insurance
Stay-at-home parents play an invaluable role in their families and are frequently the main economic contributors. From childcare, cooking and cleaning duties to tutoring services or simply making sure their kids arrive safely at school each morning and back again safely after class, stay-at-home moms provide invaluable services that would be difficult or even costly to replace upon their unexpected death.
People typically use a rule-of-thumb when calculating how much life insurance coverage they require; multiply your annual income by 10. However, for stay at home parents this process can become more involved and complex.
As stay at home moms don’t work for an employer, determining their coverage needs can be more challenging than expected. One effective approach for determining this amount would be examining daily expenses of family life without her, then extrapolating that into possible future costs without their contribution.
Considerations should also be given to child care, housekeeping services and grocery costs as these can impact on overall family budgets. Finally, any co-signers or joint account holders on any debts which will become payable upon one parent’s death are key as this ensures these individuals won’t become responsible for debts that did not originate under their name.
Life insurance provides peace of mind to surviving family members in the unfortunate event of her sudden demise, alleviating them of worry over how to cover a financial shortfall caused by their mother’s absence. Life insurance will enable the remaining members of her household to maintain the lifestyle they are accustomed to living while grieving her loss.
Life insurance is an essential purchase, but especially so for stay at home moms. If you aren’t yet protected, now is a great time to explore your options – get a free term life insurance quote to discover just how affordable life protection could be for your loved ones.
