Should more stay-at-home parents consider purchasing life insurance?
The next time you get the chance, ask any stay-at-home parent about their daily duties. Chances are good they’ll describe a routine that’s far from leisurely and downright difficult. In addition to the children, there’s transportation, cleaning and of course, meal preparation to consider.
In many households, the decision for one parent to stay home stems from familial choice. In others, however, it’s a matter of simple economics. Indeed, a cost-benefit analysis reveals that sometimes it is actually less expensive to exit the workforce than pay for childcare.
While this arrangement seems to make good financial sense, experts indicate families may still be shortchanging themselves. Specifically, they might decide to not secure life insurance for the stay-at-home parent.
The mistake is when families only look at earnings coming in. Regrettably, this limited approach discounts the aforementioned savings from having one parent exit the workforce.
Consider the unfortunate scenario of a stay-at-home parent suddenly passing away without life insurance. Here, the working parent would suddenly have to cover major expenses on a single income.
In case you have a hard time accepting this, consider the following figures. Experts indicate that the salary for a good nanny can easily be $40,000 per year. This cost can skyrocket even higher when things like overtime are factored in.
This naturally begs the question as to what type of life insurance should be purchased?
Experts indicate a term policy getting the youngest child through college is a viable option. As for amount, the consensus is 50-80 percent of the working spouse’s yearly income.
Of course, every household is different. Nevertheless, it might be time to have a conversation.
What are your thoughts?
Source: The Palm Beach Post, “Why stay-at-home spouses should buy life insurance,” Scott Johnson, April 7, 2017