Life Insurance for Stay at Home Moms: Do We Need It?

Most people would agree it’s important to get life insurance for any wage earner in a family.

After all, a family forced to survive without a primary wage earner’s income can be financially devastating.

This doesn’t mean that a stay at home mom’s (or dads!) contribution isn’t just as important. Losing a stay at home spouse could be equally devastating financially. This is why it’s important to consider life insurance for a stay at home mom.

Almost anyone can recognize what an important role a stay at home mother has. Few actually consider what the cost of these many services would be if performed by someone else.

Could your family afford full-time childcare and a housekeeper?

What about the cost for someone who does laundry, runs errands, does the shopping, prepares meals, and performs the many other time-consuming tasks a stay at home mom handles every day? This is why it’s important for a stay at home mom to have her own life insurance.

The Financial Value of a Stay at Home Mom

There is no doubt the amount of work and love they provide for a family is immense, but what’s it really worth in dollars and cents?

According to Salary.com 2014 Mom’s Salary Survey, the ten most common functions a stay at home mom performs is equal to $118,905.

If you consider that average compensation over the twenty years it takes to raise a family, a stay at home mom brings an economic benefit to the family of $2.3 million.

This Mom Salary Survey in 2014 also found that stay at home spouses work an average of 96.5 hours per week as a family psychologist, cook, teacher, housekeeper, and driver.

They even have a cool calculator if you’d to like figure out exactly what your own or the mom you love’s paycheck should be.

It may be hard to grasp and put an exact dollar amount on every duty a mother provides, but child care is certainly one thing it’s hard to argue with and it ain’t cheap!

A 2014 report by Child Care Aware of America – “Parents and the High Cost of Child Care” detailed the average costs.

For 2 children, the annual cost of care ranged from $11,310 in Louisiana to $29,016 in New York. Could your family afford that additional expense?

Which Type of Insurance Policy is Best for a Stay at Home Mom?

There’s always a big debate about whether term or whole life insurance is best but the truth is it depends on your situation. Most people prefer term life insurance because it’s affordable and simple. I will typically suggest term as the best fit for stay at home moms to the majority of my clients.

Once the kids are out of the house, the financial impact if the stay at home spouse were to perish is typically far less. This is why I believe term is the best fit.

Term life insurance covers you for a specific term, which may be 10, 20, or 30 years. You will pay your premiums every month and your coverage will end when the term is up. This type of policy does not accumulate cash value but it is the most affordable type of life insurance available.

A term life policy is the most common type of life insurance for stay at home moms because it offers protection for the family while the kids are young or approaching college age.

Another option is whole life insurance. This type of policy never expires and offers coverage for your entire life as long as you keep making the premium payments.

Unlike a term life policy, whole life insurance has a cash value. After years of paying your premiums, your policy will accumulate a cash value that you can borrow from or use in other ways. The main downside to this type of policy is the much higher cost for the same coverage amount.

How Much Coverage Do You Need?

There is a general rule of thumb for determining the necessary coverage amount by multiplying your income times 7 or 10 years.

Regardless, this doesn’t apply exactly to a stay at home parent. Instead, consider how much it would cost to take care of the many things that the stay at home mom does if she were to die.

After you’ve come up with the yearly figure to replace mom’s duties, you’ll want to multiply that amount times at least the number of years until all kids are out of the house. A little buffer on top of that would be suggested as well.

Consider the functions you will need to handle yourself if your spouse passes away. The two of you may also want to take into account paying off a home loan, as this will free up money each month and make it easier for the wage earner to take care of the kids.

What Does It Cost?

Good news!

Life insurance for a stay at home spouse is very affordable, often costing less than $15 per month for peace of mind. The actual cost will depend on many factors, including coverage amount, age, health, and more.

It can be especially affordable if it’s part of a joint life insurance policy with the wage earner. As an added bonus, insurance rates for women are about 10-20% cheaper than rates for men.

A life insurance policy for the stay at home parent can be used for many things if the unthinkable happens:

• Cover the cost of childcare
• Pay off the mortgage and debt
• Pay for the children’s education
• Leave kids an inheritance
• Pay final expenses

No one wants to think about losing a spouse or their children losing their mother. Unfortunately, bad things happen to people every day and losing a spouse and parent is hard enough without additional financial hardship.

Don’t overlook a stay at home spouse during insurance planning; life insurance for a stay at home mom offers both spouses the peace of mind knowing the surviving parent won’t be forced to take a second job or suffer to make sure the children and household are taken care of.

Part of proper insurance planning for the family is looking at all the options including possibly a family life insurance policy. An experienced broker can help answer your questions and get you the right coverage tailored to you.

Always remember that premiums can vary widely between companies.

That’s why it’s SO important that you understand how the different carriers might view your personal situation. Shopping around will result in you getting the best life insurance coverage for your needs at an affordable premium.

Please keep in mind that underwriting guidelines can and DO vary greatly between carriers and this is often a complicated maze for consumers to navigate.

The secret to getting the lowest rate is placing you in a policy with the company that views you in the most favorable light.

The truth is while our quote engine is a great place to start, if you are applying for life insurance as or for a stay at home mom, your best bet is to work with a broker who understands the complicated guidelines and will fight on your behalf to get the lowest rate for your situation.

We are one of the rare independent brokers that only sells life insurance so we’ve gotten pretty darn good at it.

If you are ready to get started, please fill out a quote request or always feel free to contact us with any questions.

We are here to help and will never pressure you in any way.