Should a stay at home parent have life insurance?

“You have insurance on your pets, your cell phone, your diamond ring, but not yourself?  As a stay-at-home parent, you should only buy life insurance on yourself if you love your children.” – Jeff Gurman

Many families wonder if stay-at-home parents need a life insurance policy. As a stay-at-home parent, you may think you don’t need an individual policy because you have little or no income. However, if you were to pass away unexpectedly, your family would be emotionally and potentially financially devastated from losing you. A life insurance policy on a young, healthy, stay-at-home spouse is ridiculously inexpensive and protects their family’s future.

Here are some of the many reasons stay-at-home parents need life insurance:

  1. No one is “just” a stay-at-home parent: they are also their household’s chef, laundry service operator, chauffeur, tutor, housekeeper, childcare provider, and much more. While stay-at-home parents may not have an official salary detailing all of these jobs, they are still extremely important to the health and well-being of your children and family. How much would all of these services cost if you weren’t around?
  2. What if, in addition to a stay-at-home parent’s death, the sole provider lost his/her job or became disabled? Most stay-at-home parents think that they don’t need protection because of their spouse’s income, but the spouse who works will inevitably need to take time off of work, and could even lose their job, or become disabled. This would result in a complete and total lack of a sustainable income.
  3. If you homeschool your kids, (as we all learned could be a norm in the age of COVID-19) what will happen to their education when their teacher is gone? If you wanted to provide additional opportunities for higher education in your absence like private school or after-school activities, a life insurance policy would allow your family to make the transition with financial ease.
  4. And finally, if you were gone, you would probably want your spouse to be able to take off an extended period of time – even a year or more – to help your children adjust, rather than have them raised by someone else.

How much life insurance should a stay-at-home parent have?

Obviously, that depends on a number of factors such as your net worth and other sources of income, but my rule of thumb is that the stay-at-home parent should have a policy that is similar to their spouse’s, up to at least $2,000,000. No investment today could guarantee over a 3% return, so at this face amount, your family could receive up to $60,000 a year (after carefully investing) to successfully maintain your family’s lifestyle without you.

My favorite low-cost policy for stay-at-home parents? 

We have an inexpensive term policy which in addition to providing valuable coverage, you can also receive 50% off room rates (for a getaway with your breadwinner), up to $50 in free groceries per month, and a $25 Apple watch or free Fitbit. In addition, if you maintain healthy habits, your premium can also go down every year. These benefits could way overshadow the premiums, as is the case with the policy on my stay-at-home wife, Yaira. The hotel savings alone has saved me more than the premium and in addition, we save $50/month on healthy fruits and veggies.

As always call me if you have any questions. 310-417-9040.

-Jeff Gurman

The information above is not to be construed as tax, legal, or investment advice. That advice can only be provided by independent tax, legal or investment advisors. CA Insurance License #0815028.

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