How much would it cost to hire someone to replace you?

Stay-at-home moms and dads are often quick to dismiss the financial support they bring. Being a caregiver, tutor and chauffeur to the kids while keeping the household running doesn’t seem as financially helpful as bringing home a paycheck. As a result, some families only buy life insurance for the working parent.

But this is a big mistake. Why? Because in most cases, the surviving parent can’t afford to quit their job if something happens to their stay-at-home spouse. Neither can they take care of the kids, do the chores and earn a full-time wage — all at the same time.

It’s not about replacing income

According to the Pew Research Center, nearly one in five parents don’t work outside the home. Of these, three out of four stay-at-home moms and one-fourth of stay-at-home dads are there exclusively to care for family. And the trend is continuing. How we think about the value of stay-at-home parents needs to change, too.

 Protection is not just for income replacement — it’s also about gaining the ability to pay someone to do the stay-at-home parent’s jobs. In addition to costs like childcare, payouts can cover final expenses such as funeral and medical bills. It allows you to leave a legacy to the next generation too. 

Working out the coverage you need

If you’re wondering how much life insurance you need as a stay-at-home parent, here are some factors to consider:

• How many children do you have? 
• What are the costs of childcare facilities near you?
• How many years will your children need care for?
• Which household duties will your partner outsource in your absence?
• Are your children homeschooled? What will happen to their education? 

If you plan to go back to paid work in some capacity, then it’ll be prudent to factor in your expected salary.

Should you get term life or permanent life?

Term life is often more affordable, but you’ll only be covered for a specific period. 

A permanent life policy, on the other hand, offers lifelong protection and has a cash value component that builds up over time. 

For more on how to choose a life insurance policy or to calculate the coverage you need, talk to your financial professional.

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