Why a Stay-At-Home Parent Needs Life Insurance

Stay-at-home parents do not have it easy. They master multi-tasking like no one else; they wear many hats—but they don’t get paid for all their hard work. According to study made by salary.com the contributions of a stay-at-home parent top $160,000 per year! Given this number, we recommend that stay-at-home parents seriously consider obtaining a life insurance policy to protect the value of this contribution. 

While stay-at-home parents don’t have an actual salary, their contributions to the family’s finances are irreplaceable—they are saving money by being the “babysitter, teacher, cook, housekeeper, grocery shopper, taxi driver,” etc. The list just goes on, and their work is certainly more demanding than most full-time jobs. Stay-at-home parents contribute all of their time, and their time is worth quite a bit—and therefore, it is worth protecting. Replacing their contributions would be very expensive if they were to pass away unexpectedly. 

Childcare and education are the top contributions that factor into life insurance calculations.  Without a doubt, the surviving parent can probably do things like cooking and laundry; however, they probably wouldn’t have the luxury of quitting their job and being at home with their children full-time. Without the stay-at-home parent, the survivor’s income would be even more crucial. 

CALCULATE THE COST OF OUTSOURCING A STAY-AT-HOME PARENT’S CONTRIBUTIONS: 

• Estimate how much you would have to pay others for doing the household services performed by the stay-at-home parent that will not be assumed by the surviving parent
• Add to it how much childcare would cost for each child
• Then add the cost of education per child (private schools, higher education) 
• Multiply this amount by the number of years services would be needed (or, until the youngest child leaves the home or graduates from college)

Anything that the stay-at-home parent does now that would need to become a paid service if they were to pass should be factored into life insurance calculations. To give you some perspective, realize the amount of money (and time!) you would have to spend monthly on childcare, housekeeping services, shopping, cooking, etc. without your stay-at-home partner. 

Another thing to consider is the status of your family’s debt if there is any. You should factor in any car loans, mortgage, or even whether your children want to go to college. Would you sell a car upon your partner’s death? Also, understand that mortgage payment will still need to be paid every month—on top of everything else that the surviving spouse is going to have to pay for after losing their partner. 

Note: Don’t neglect budgeting for therapy or grief counseling services if the stay-at-home parent is the primary caregiver to children. Professional services may help children cope with a loss of a parent and help them find their new normal. Great resource is Military OneSource that offers non-medical counseling to military family members who have lost a loved one, and their consultants can be reached at 800-342-9647. 

DO YOU NEED LIFE INSURANCE IF YOU ARE ALREADY COVERED UNDER FSGLI?

Spouses of servicemembers typically have $100,000 in life insurance coverage under Family Servicemembers’ Group Life Insurance (FSGLI) (as long as the servicemember did not decline their SGLI coverage), and $10,000 coverage is in place for each dependent child at no cost. When the servicemember finishes his/her career, both FSGLI and SGLI coverages end. After you do the math, $100,000 of life insurance coverage wouldn’t likely be sufficient to cover for all expenses related to stay-at-home parent’s death. Having a supplementary life insurance plan in place for both parents ahead of the servicemember’s separation will not only ensure that each has an appropriate amount of coverage while still in the military, but also that a seamless transition can occur once separation is imminent.

WHAT TYPE OF LIFE INSURANCE IS BEST FOR A STAY-AT-HOME PARENT? 

The biggest contribution to family’s finances that a stay-at-home parent provides is childcare. Childcare, however, has a time limit. Therefore, when shopping around for life insurance policy, it makes sense to purchase policy that will last until the youngest child is 18 years old or until they finish college. Based on the insured’s age, the term lengths vary from five to 30 or more years. 

The cost of term insurance will depend on the term length, the amount of coverage, and the age and health of the insured, but premiums remain leveled for the duration of the term. The best practice is to lock in the coverage when the stay-at-home parent is young and healthy. Coverage becomes more expensive and harder to obtain with growing age and development of chronic conditions. 

Navy Mutual provides two types of term insurance:

• Flex Term: $50,000-$1,000,000 coverage. Ideal for 18-45 years old. 
• Level II Plus Term: $50,000-1,500,000 coverage. Ideal for 45-75 years old. 

You can’t put a price on love, but you can put a number on each family member’s contributions to your home. Navy Mutual wants to give you the peace of mind that comes with knowing that your family will be taken care of if you or your spouse were to pass. You can schedule an appointment with Navy Mutual or call for consultation at 800-628-6011. 

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