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How Much Life Insurance Do You Need For Stay At Home Mom or Parent?

https://www.goodfinancialcents.com/wp-content/uploads/2019/07/MG_5503-150x150.jpg
  • Written By:
    Jeff Rose, CFP®

    Jeff Rose, CFP®

    Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance...

    Read More
  • Updated: September 1, 2021
  • 4 Min Read
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    GoodFinancialCents® has an advertising relationship with the companies included on this page. All of our content is based on objective analysis, and the opinions are our own. For more information, please check out our full disclaimer and complete list of partners.

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With the arrival of our second child, my wife and I have revisited how much life insurance we need.

Then we had our third son, and she quit her job, so now we’re trying to determine the amount that we need on her to make us comfortable.

We’re very fortunate in the sense that her parents live close to us and are willing to watch our kids when we need them.  (Thank you Papa and Gigi!)

Any parent can easily recognize what a great economic benefit that is, in addition to an emotional benefit.

Some parents either need to stay at home to raise their children or they choose to.

For those that do decide to be a stay at home parent, that doesn’t mean that life insurance is not needed for them.

Stay at home parents are often multi-taskers who cook, clean, do the laundry, pay the bills, go grocery shopping and more yet they are traditionally undervalued. My wife even helps with my blog and edits my videos! 

Imagine how much money a stay at home parent would make if they were paid for their work.

According to the 2016 Mom Salary Survey from Salary.com. If you were to take everything a stay-at-home mom did and put a dollar amount to it, it would come out to a salary of over $48,000. The study also put an overtime figure of $94,000, which comes to a total of $143,000.

You can argue if this amount is really in the ballpark.  Even half that amount would have a significant impact on many households.

Stay at Home Mom’s Salary

Replacing the contributions of a stay at home parent would be very expensive, especially considering the number of years it takes to raise a family. If we take the $143,000 average annual compensation over 20 years, the economic benefit provided would be $2.86 million. As you can see, this is why it makes sense to consider life insurance for the stay at home spouse.

Life insurance can greatly benefit a family going through the very difficult period of adjustment after the loss of a parent and beyond. Make sure to check out our list of top life insurance companies when seeking a policy!

When calculating how much life insurance coverage a family should purchase for a stay at home spouse, look at how much it would cost to pay others to perform functions currently handled by them.  We also took into account paying off the home mortgage to free up that monthly cash flow that could go toward taking care of our kids.

When I think about some of the services that my wife performs they include being a nanny, a chauffeur, cook, housekeeper, tutor, nurse, and bookkeeper.

In addition to having to pay for help in these areas, a family that has lost a parent may also have an increase in other expenses.  I know if my wife were not here, I would be destined to eat out more and buy more expensive convenience foods.  That’s not including the laundry and cleaning the house.

I, like most other men, would be hurting.

It’s likely that most couples haven’t thought through the potential repercussions of not covering the stay at home parent with life insurance. But, as you can see, taking life insurance out for the spouse that works at home is equally as important as taking out insurance on the main breadwinner.

How Much Life Insurance Do You Need

The amount needed for a stay at home mom will depend greatly on your geographic location, number of children you currently have and expect to have, the breadwinner’s salary and job security, and the overall health of that parent.  For many of the families, I have worked with the decision usually revolves around how much debt they currently have (including the house) and college expenses.  So if you have $250,000 left on your mortgage and three kids, a life insurance policy of at least $500,000 is probably in order.

As a reference, you can check out a recent post I wrote that discusses how much life insurance you need to buy.  As stated in that post, be sure to get several quotes from different carriers and be sure to stick to term life insurance.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
With a Life Insurance policy you can take care of your family the right way.
Should anything happen to you, you'll want to leave your loved ones a financial nest egg for their wellbeing. Click on your state to find out more.
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Losing a Loved One

We need to realize that losing a parent is difficult enough and adding financial hardships to the mix can make it much more painful. Life insurance coverage can help ensure that the surviving parent would not be forced to work long hours or to take a second job to pay the bills.

But instead, put more focus on managing the household and caring for the children during a critical time in their life. By assessing your specific requirements and preparing accordingly, you can help yourself make the proper life insurance decision so that the rest — so they can rest easy knowing that family financial needs be met well into the future.

Buying Life Insurance as a Stay-At-Home Parent

Most people only think about buying life insurance for parents who have a stream of income, but that isn’t the best idea. Just because a mom or dad isn’t having a paycheck coming in every week doesn’t mean they shouldn’t have a life insurance policy.

Thankfully, you can get enough life insurance to cover the loss of a stay-at-home parent without breaking your bank. Even if you don’t want to buy a $1 million plan, you should still have a plan to help ease the financial burden of losing a parent.

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About the Author

Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion - educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.


Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University - Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® - Accredited Asset Management Specialist - and CRPC® - Chartered Retirement Planning Counselor.

While a practicing financial advisor, Jeff was named to Investopedia's distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC's Digital Advisory Council.

Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

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3 Comments

  1. Marc @ Vital Dollar August 14, 2018

    My wife has been a stay at home mom for the past 6 years. We do have a life insurance policy on her, although it is significantly less than the coverage on me. If something were to happen to here, especially now while our kids are still young, I would definitely have bigger expenses that would need to be covered.

    Reply
  2. tian September 12, 2012

    well done! my problems are gone My woman came back last night, i thought it’s a joke she came to say good bye to me ,then i waited ,suddenly i saw preparing food,bed and hide under branket, i couldn’t believe any thing i see, i decide to sleep at the gouge to see what happens next ,only see her come and slow her self on me start kissing and then i realize you are the true healer, its now 2 weeks since she came home ,but doc my sex life has gone down i don’t know why , i want to come and order for that medicine. i will phone you later today! i appreciate your services, be there for us please. thanks you to [email protected]

    Reply
  3. Ornella @ Moneylicious August 22, 2012

    Figuring a stay at home mom salary is soooo crucial. I think too often most families overlook the financial piece of stay-at-home moms. Unfortunately, it’s not a job that pays, but it doesn’t mean there shouldn’t be life insurance. There’s an incredible amount of value moms bring to the family.

    Reply

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