UPDATED: Mar 19, 2020
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It is a common misconception that a stay at home parent does not need life insurance. After all, as the reasoning goes, that parent is not bringing income into the home would have to be replaced if they passed away. The error in this line of reasoning is that the stay at home position is a job that starts at midnight and ends at 11:59pm, 7 days a week, despite the fact that there is no tangible income. Without the role of a stay at home mom, the costs of the household would increase, because someone would have to be paid to care for the children, prepare meals, wash laundry and all of the
other jobs a mom does in the course of the average day.
Stay at home moms need to have life insurance just badly as the dad who spends 40 hours at work each week. Without the mom to hold the household together, things would quickly deteriorate, and there is no dollar value that can be ascribed to the job of a mom. Even discount the costs of her final expenses, which could be enormous, the cost of carrying on could be a staggering financial blow to an unprepared family.
To calculate the amount of life insurance necessary, begin with the known variable such as the cost of childcare, multiplied by the number of children and multiplied again for the number of years each child could be expected to need before, during, or after school care. Multiply this number by .05 and add it back to the total. You have calculated a single aspect of the stay at home mother’s job, but you’ll have to perform the calculation again for the laundry, the cooking, the cleaning, and each of the other tasks a mom does. A shortcut would be to calculate a set wage as the basis of the coverage, multiplied out for at least 20 years. In both situations, it will become obvious quickly how much of a financial role the mother actually plays.
The fact is, every member of the family should have a life insurance policy. Purchasing a policy for young children will net the lowest life insurance rates and circumvent many of the exclusions for preexisting conditions that could spring up as the child ages. Furthermore, the child can take a whole life policy along throughout his life, and the policy you purchased for him at an early age could mature into a powerful financial tool by the time he has graduated college.