One of the main reasons families get life insurance policies is to protect themselves in case their primary source of family income passes away. But what about stay-at-home parents who don’t bring in an income? Should they still get life insurance?
Life insurance is an excellent idea for stay-at-home parents for many reasons. The Medical Profiles, Inc. team will cover everything you need to know about life insurance for stay-at-home parents in Houston, TX.
Why Should Stay-At-Home Parents Get Life Insurance?
Stay-at-home parents might not bring in an explicit income, but they provide significant value through the various services and tasks they perform. More specifically, stay-at-home parents typically act as:
- Teacher
- Care provider
- Chauffeur
- Housekeeper
- Laundry
- Project manager
- Coach
- Tutor
- And more
If a stay-at-home parent passes away, families lose the person providing all those services. The parent working full-time still needs to bring in an income. However, full-time child care is expensive when you do not have another parent covering those services.
Life insurance can fill the gap and make up for any lost services if a stay-at-home parent passes away.
How Much Life Insurance Do I Need?
The exact amount of life insurance coverage a stay-at-home parent needs varies widely. Generally speaking, a 15-20 year policy with a $200,000 to $400,000 payment is a good rule of thumb, but your circumstances may differ.
One major consideration is how long you need coverage for your children. If your children are young, the stay-at-home parent might need a 15 or 20-year policy. If the children are adults and out of the house, you may not need life insurance coverage, or you can opt for lower coverage.
The three main areas you need to consider are education, child care, and household services. You can estimate the annual costs of these services and extrapolate your needed coverage to the relevant timeframe.
Let’s say you have a child who is five years old. You calculate that the stay-at-home parent performs approximately $25,000 of services a year. A reasonable 10-15 year policy would have a value of between $250,000 and $400,000.
You can then take any money from death benefits and put it into a mutual fund. This fund can provide a continual source of money for child care services.
Best Life Insurance Policy for Stay-At-Home Parents
There are two main types of life insurance for stay-at-home parents in Houston, TX, to choose from: term life insurance and whole life insurance. In most cases, a simple term life insurance policy will be the best choice because it has lower premiums and a straightforward payout procedure. A healthy 30-something-year-old parent could get a $400,000 death benefit for a premium ranging from $30 to $70 a month.
On the other hand, a whole life policy comes with a cash benefit that families could use to further fund child care efforts. For example, beneficiaries could take out a tax-free loan against the cash value of the policy to fund their child’s college education.
Whole life policies also never expire. They are useful for dependents who may require long-term care, multiple health care providers, or nursing home care.
The main downside is that whole life policies have more expensive premiums, which can quickly add to other monthly expenses. Whole life policies also have more complex payout rules.
Schedule a Paramedical Exam Today!
Now that you know the specifics about life insurance for stay-at-home parents in Houston, TX, it’s time to take the next step. Contact Medical Profiles, Inc. at (832) 251-3926 to schedule a paramedical exam for your life insurance policy!
