Far too many families forget to purchase life insurance for a spouse that stays at home and takes care of the children. This can be a tragic mistake should the stay at home spouse die unexpectedly. There are many things that he or she does that would need to be replaced right away such as caring for the children, cleaning the house, and other items. This could make a dramatic impact on your family’s budget and put you in a financial hurt. This is of course on top of your loss. Here are a few thing to think about when you are considering purchasing either term life insurance or cash value life insurance for a stay at home spouse.
It Is Tough To Replace A Stay At Home Spouse
If you stop and think about it, a stay at home spouse provides a lot of services to the family. Should your spouse die unexpectedly, then you would need to hire someone to come in and fulfill those roles in your home. For example, think of all the cleaning that your spouse probably does on a daily bases. Your stay at home spouse also most likely cares for your preschool aged children. If he or she should die, you would need to pay someone to do those things. The same could be true for meal preparation. Not having insurance to cover the cost of these items could leave you in a financial bind.
It Doesn’t Matter If A Stay At Home Spouse Earns No Income
It does not matter that a stay at home spouse does not earn an income. This is a little counter-intuitive to the typical life insurance advice. Normally life insurance is purchased to replace a loss of income. In this case, you are purchasing life insurance in order to replace a lost service that your husband or wife performs for the family. While a stay at home spouse does not earn an income, your family’s cost of living would increases while your lives suddenly got a lot more expensive in a relatively short period of time.
A Stay At Home Spouse May Still Have Debts
Another reason that you may need life insurance for your stay at home spouse is that he or she may have debts that would need to be settled upon his or her death. This could leave you in a precarious financial situation if you are not careful and have not planned ahead. You will need to add the amount of debts that your spouse has accumulated into the amount of income or yearly costs that you want to replace with life insurance. For example, if your spouse has a car loan of $20,000, you would want to add at least that amount of life insurance coverage to any policy that you purchased in order to settle the debt after they are gone. Another item and cost to consider is the cost to bury your loved one as well. Funerals are a very expensive endeavor and can put a serious dent in your budget if you haven’t thought about it before you loved one’s death.
How Much Life Insurance Should You Cover A Stay At Home Spouse With?
So, how much life insurance do you need to purchase? That can be a tricky question when your stay at home spouse does not have an income. You will want to consider adding all of his or her outstanding debts to the amount of money that you need to replace on a yearly basis for services he or she typically performed such as childcare, cleaning, cooking, and the like. Like buying insurance to cover an income, you will also want to consider purchasing about ten times the amount want to cover on an annual basis. So, for example, if you calculate that childcare costs will run you approximately $10,000 per year if your spouse was gone, you may want to consider at least a $100,000 policy to protect your loved ones. Of course, this is just a rule of thumb and can be adjusted to suit your family’s needs.
Do not make the mistake of not purchasing life insurance for your stay at home spouse. There are many services that he or she performs that could potentially cripple your family’s finance should the future need not be covered by the proper amount of life insurance coverage.