Ask any stay-at-home parent: It’s a full-time job. There might not be pay, reporting structures, or the other usual trappings of typical jobs, but they’re real jobs, and they’re real hard work.
Even as that recognition has become more and more prevalent, one aspect often goes overlooked: life insurance for stay-at-home parents. Let’s take a look at why that’s the case—and why it shouldn’t be.
Why insure someone with no income?
It’s only been in recent years that we’ve opened our eyes to the true value of stay-at-home parents. Salary.com put a figure on it, valuing the profession of stay-at-home mom—forgive the unnecessary gendering—in 2019 at $178,201 a year.
While paying out that kind of salary isn’t feasible for most, one thing that is within your reach is life insurance. After all, if a stay-at-home parent’s time and efforts have significant value, then their absence would be a financial, as well as emotional, hit. Viewed through that lens, life insurance absolutely makes sense for stay-at-home parents.
Salary is usually one of the biggest criteria used to decide the amount of life insurance coverage to get. But in the case of stay-at-home parents, how do you insure against a non-existent salary?
There are two ways to think about it: what you are doing, and what you could be doing.
Your responsibilities, without you
Think about the responsibilities you have that would still need to be done in your absence. A partial list might look something like this:
What would happen if your family became a single-parent household? All those responsibilities would fall on the shoulders of a parent that had another job. Luckily, though, it’s relatively easy to assess the value of those duties. Figure out how much it would cost to send the kids to daycare, get a house cleaner, hire a tutor, and maybe get a meal prep subscription and grocery delivery service. Sure, that’s a lot of money—but a lot of money that you’re worth, and your family will need.
Another consideration is that your partner won’t be able to simply replace your parenting with an army of paid assistants. One option to plan for is them reducing their work schedule. If they had to drop down to three or four days a week, how much income would they have to sacrifice? That’s money that life insurance could be covering.
There are also the one-time costs that your loss would incur. Funeral costs and debt obligations are the most obvious, but remember, this would be a monumental change for your family. And that might mean monumental adjustments. Your partner might decide to have a grandparent move in to help with the kids, and that could mean costly home alterations or an addition to the house. Factor that into your decision, because trying to cram an extra person into a bedroom that doesn’t exist will up everyone’s stress level.
The opportunity cost
The other way to think about it is Economics 101: Each choice you make sacrifices the benefits of an alternate choice. Many stay-at-home parents used to have traditional careers. When they chose to take care of their family full-time, they gave up the earning potential they had.
In the context of life insurance, that earning potential is still valid, though. Many stay-at-home parents return to their former careers once the kids are more self-sufficient. And that income is something you should be able to provide for your family, even if the unthinkable occurs. So when it’s time to decide how much coverage to get, it’s worth considering your worth in the traditional working world.
Keeping things running
If you’re a stay-at-home parent, it can be hard to imagine how your family would function without you. While no amount of money will ever replace you, life insurance can at least handle the financial impact of your loss. Getting coverage is a way for you to keep everything running when you can’t be there to keep things running. To see how Ladder can help, price out a term life policy for your family today.