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

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 who 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 2021 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 $184,820. Considering bonuses, overtime, and hazard pay from the past year’s work intensity, a stay-at-home mom could earn over $200,000 annually.

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 $200,000 average annual compensation over 20 years, the economic benefit provided would be $4 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 a 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, a cook, a housekeeper, a tutor, a nurse, and a 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 who works at home is equally as important as taking out insurance for 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, the 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.

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 take a second job to pay the bills. Instead, put more focus on managing the household and caring for the children during a critical time in their lives.

By assessing your specific requirements and preparing accordingly, you can help yourself make the proper life insurance decision so that they can rest easy knowing that family financial needs will 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 the 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.

The Bottom Line – How Much Life Insurance Do You Need For Stay At Home Mom or Parent?

Recognizing the invaluable contributions of stay-at-home parents is essential.

Their roles as caregivers, tutors, housekeepers, and more provide both tangible and intangible benefits to a family. Financially, their worth translates into a significant economic value.

Therefore, ensuring they have an adequate life insurance policy is as crucial as ensuring the primary breadwinner. Such coverage alleviates potential financial strains in the tragic event of their loss, allowing the surviving family members to focus on emotional healing and continuing care for the children.

It’s time to shift the perspective and ensure that every parental role, whether income-earning or not, is insured appropriately.