The job of homemaker can be rewarding, and the care a stay-at-home parent provides is invaluable to his or her family. However, when it comes to calculating life insurance needs, many families obtain only coverage for the primary breadwinner. They may not want to consider that the death of a stay-at-home parent would not only be difficult emotionally for the family, but could also create financial challenges for the surviving spouse and children.
Since homemakers generally do not earn a paycheck, estimating the economic benefit of their contributions to the family may be complicated. Clearly, the cost of the services provided by a stay-at-home parent can be substantial, but what those costs involve depends on the family’s circumstances. For example, if the children are younger, child care costs need to be budgeted. If the surviving spouse works long hours, the family may also want to factor in the cost of a housekeeper or landscaper.
The first step in calculating an appropriate amount of life insurance coverage for a stay-at-home parent is to assess 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:
- Family Care
- Recordkeeping and Household Management
- Food Preparation
- Housekeeping and Maintenance
- Yard and Car Care
- Laundry and Clothing Care
In addition to having to pay for help in these areas, a family that has lost a parent may find that other expenses may increase 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, school supplies, and other items.
Replacing the contributions of a homemaker and caregiver can be very expensive, especially when factoring in 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 income 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 may 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 proceeds may be used to help pay for child care or housekeeping services after the surviving spouse returns to work. Or, it may be possible to save a portion of the life insurance proceeds to help pay for future college expenses.
Although losing a parent can be devastating, financial hardship as a result of that loss does not have to be 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. Consult with a qualified insurance professional to review your options for life insurance coverage and prepare for the future accordingly.