Personal Finance

How Much Life Insurance Does a Stay-at-Home Parent Need?

Editor's Note

You can trust the integrity of our balanced, independent financial advice. We may, however, receive compensation from the issuers of some products mentioned in this article. Opinions are the author's alone. This content has not been provided by, reviewed, approved or endorsed by any advertiser, unless otherwise noted below.

Life insurance is important for every family to consider, but how much life insurance does a stay-at-home parent need? These are the things you need to consider.

Some stay-at-home parents may have no income and others may have some income. How does this affect life insurance for that parent?

Generally, financial gurus recommend that you purchase 5 to 20 times your annual income in life insurance coverage, to protect those you love. But what if you don’t technically have an income to calculate that from because you’re a stay-at-home parent? Or what if you contribute to the family bank account from a side hustle, but full-time parenting is your primary gig?

We all know that zero multiplied by anything is zero, but that doesn’t mean that a stay-at-home parent should forgo life insurance. In fact, as a stay-at-home parent, you make incredibly valuable contributions to your household — contributions that would cost your family a pretty penny should something happen to you.

Getting your finances in order is a big step here. Try Personal Capital’s free financial dashboard. Link your accounts and get a big picture view of where your money is going. Read more about it in our Personal Capital review.

The Value of a SAHM (Stay-At-Home-Mom)

According to a recent survey, the “market price” of a stay-at-home mom in 2019 is valued at about $178,201 (sorry, dads, you weren’t part of the survey this time). This is the estimated cost you would incur if you had to outsource all of the jobs that moms are typically responsible for within the home.

The survey looked at the average cost of services such as a housekeeper, child care provider, chauffeur, dietician, and more. This most recent survey also included modern roles that haven’t really been considered in the past, such as network administrator and recreational therapist.

If you had to hire someone else to take care of all those services, you’d pay a lot to do it.

But how does that translate in terms of life insurance coverage? Does that mean that a stay-at-home parent needs more than a $1 million policy?

Probably not.

Related: The Complete Guide to Life Insurance

The truth is that in single-parent households, not all of these services are outsourced. Yes, if something happened to you, your spouse would have to pay for child care and would probably appreciate hiring someone for extra services like housekeeping. But plenty of working single parents clean the house, make the lunches, plan the doctor’s appointments, run to school and soccer practice, and still work.

The Goal is Something In Between

While your stay-at-home parent services are invaluable to your family, you don’t want to wind up with more life insurance than you can afford. So when you’re deciding how much term life insurance coverage to buy for yourself, you’ll have to do some personal calculations and some hard thinking.

Here’s a look at one process for deciding how much life insurance to carry for the stay-at-home parent in your family.

Step 1: Calculate What You Actually Need

First of all, you should talk about what life would look like if that parent died. No one likes to think about this possibility, of course, but to make good life insurance decisions you must.

Which services would the surviving spouse need (or want) to outsource? These might include things like childcare, housekeeping, landscaping, dog walking, tutoring, cooking (or even just meal prep services), or something like a household manager to make appointments and keep things running smoothly.

Look into the cost of full-time child care in your area and include that in your calculations. Think about how your kids will get to and from school, whether they’ll need care after school and on holidays, and how you’ll manage holiday/summer breaks.

Remember to look at the ways a stay-at-home parent usually saves your family money, as well. For instance, many stay-at-home parents are able to shave hundreds off the monthly grocery bill by meal planning, couponing, and cooking at home. If something happened to this parent, the family’s food costs could go up quite a bit.

Related: How to Create a Bare Bones Budget

Don’t forget to look into counseling services. If something happens to your children’s primary caregiver, chances are high that they’ll need some professional help to cope in a healthy way. How much would some basic grief counseling or therapy cost your family?

Again, it’s not fun to think about these possibilities, but it’s essential for choosing the right amount of life insurance for a stay-at-home parent.

Step 2: Figure Out How Much It Costs

Next, you’ll want to research how much life insurance coverage would cost. Term life insurance rates are typically pretty inexpensive. But if you’re a one-income family living on a tight budget, you may not be able to afford much coverage. On the other hand, if rates are very low, you might be able to afford the luxury of more coverage.

The key is to make sure you can pay for it, even if you get into a financial bind down the line. Not paying your premiums can result in a termination of coverage, which is not a place you want to put your family.

The reality is, that life insurance isn’t all that expensive if you’re in relatively good health… and if you know where to look.

For example, one of the best places a stay-at-home parent can look for term life insurance is Bestow.

Bestow is a newer company that has completely shifted the way we shop for life insurance. They don’t require you to set up annoying doctor visits or submit to blood draws and urine tests. You don’t have to deal with complicated paperwork through the mail, either.

It’s basically the perfect scenario for a stay-at-home mom who has plenty of other things to worry about. Policies start at just $16 per month, and you can apply from your phone within about 10 minutes. (Check out our Bestow review to learn more.)

Find the Cheapest Insurance Quotes in Your Area

Read more: Cheap Life Insurance

Step 3: Decide How Much to Buy

Finally, choose how much you want your policy to be worth.

A good option is to apply through a broker, so you can get the best deal on the amount of coverage you need. It’s also easy to get life insurance quotes online, allowing you to adjust options and find the best fit through multiple insurers at once.

There are many hats that a parent wears — especially a stay-at-home parent — and part of that job is making sure your children are cared for in all eventualities. To help you feel confident in your decisions, consider using the Policygenius tools and insights resources available online; these make it easier for you to decide on the best insurance policy and how much to plan for.

Step 4: Shop Around for Coverage

Now that you know what you need in terms of your life insurance coverage (and why), it’s time to find *the* policy. This usually involves shopping around a bit through multiple providers, to find the best price with the best options for your family.

You might want to start with a life insurance aggregator platform. There, you’ll be able to get quotes from a number of insurers at once, without having to enter your information multiple times. You can start your search on Policygenius.

If you know for certain that you want term life insurance coverage, get a quote from a company like Bestow. Their 100% online process allows you to get pricing in seconds and buy a policy in just minutes, if approved. Plus, there is no medical exam required to qualify for coverage.

Having the right type of life insurance coverage for both parents in a family can give you peace of mind. You can sleep well knowing that you’re protecting your family, and especially your children, in the worst possible circumstances.

If one partner in your family stays at home with the kids, calculating life insurance needs can be more complicated because you can’t simply multiply your annual income. Take the time to figure out how much coverage the stay-at-home parent warrants, though. It is an important step in making sure your family is best protected.

Related: How Stay-at-Home Parents Can Protect Their Finances for the Future

Recommended Stories