The importance of life insurance for the stay-at-home spouse.
Most people agree that the wage earner in any family should have life insurance protection. After all, how would the family survive without a breadwinner's income? But, what if something were to happen to a stay-at-home spouse? There could be a tremendous financial impact if that happened, too.
Indeed, while everyone recognizes the vital role of the family homemaker, few people stop to think about the cost of services performed by the stay-at-home spouse. This includes child care, elder care, housekeeping, preparing meals, and many other time-consuming activities like carpooling, laundry, and grocery shopping. The average price of full-time care for an infant in a center ranges from $9,374 in Mississippi to $34,381 in Massachusetts.1 That's why it's crucial for a stay-at-home spouse to have his or her own life insurance protection.
Despite the importance of the stay-at-home parent, there's little research to quantify its value. In its 2016 Mom Salary Survey, Salary.com reported the most common functions performed by mothers would translate to a $48,509 base salary and $94,593 in overtime, for a total of $143,102. It further states that stay-at-home spouses work 92+ hour weeks, serving as housekeeper, teacher, cook, psychologist, and van driver – and doesn’t even include the hours spent as soccer coach, fairy godmother and building block architect.
HOW MUCH LIFE INSURANCE DO YOU NEED?
There are no hard and fast rules for determining how much life insurance is enough, because no two families have exactly the same needs or resources. As a general rule of thumb, though, the appropriate amount of insurance protection could equal up to an individual's annual salary times the number of years before the youngest child is out of college, depending on other available income or resources.
When calculating an amount for a stay-at-home spouse, the annual financial value of the services they provide should be used. Let's say you determine that the financial value of the services a stay-at-home spouse provides for your family equals $50,000 a year. If your youngest child will finish college in 15 years, the appropriate amount of insurance protection needed for the stay-at-home spouse would be approximately $750,000, depending on other available income or resources.
Some other things you might want to consider in determining an insurance amount include funeral costs, medical expenses, probate fees, estate taxes, and inflation. Your insurance agent can help you determine how much life insurance you will need.
REMEMBER YOUR WORK-AT-HOME SPOUSE IN YOUR INSURANCE PLANNING.
It can be easy to overlook the financial contributions of a work-at-home spouse—that is, until the person is gone. If you or your spouse decides to remain at home to care for your children, don't forget that the contribution of the stay-at-home spouse can equal tens of thousands of dollars a year. The loss of a parent is hard enough on a family; purchasing insurance coverage for a stay-at-home spouse can help ensure that the loss doesn't become a financial hardship as well.