The Importance of Buying Life Insurance Policies for a Stay-at-Home Parent

The majority of people who think about life insurance, experience a variety of ill feelings. It forces them to think about their own mortality. So when a family comes to the conclusion a life insurance policy is needed, Canadians may believe they've fulfilled their duties if they only get coverage for the working parent. However, many neglect to consider how family life may be if the person the family loses is the stay-at-home parent.

This is a significant oversight. According to Statistics Canada there are 2.7 million couples in Canada with at least one child at home and one in five of these families (501,000) include a stay-at-home parent. (Other interesting statistics about Canadian stay-at-home parents: Of these 501,000 families, 88 per cent were made up of a stay-at-home mother and 12 per cent a stay-at-home father. Fathers are increasingly represented as the stay-at-home parent.)

Why Purchase Life Insurance for Stay-at-Home Parents?

It's not always understood initially why stay-at-home parents need to purchase life insurance; in fact it's one of the most common life insurance myths that if you don't work outside of the home it's not needed. Although they remain at home taking care of the family and the house, what a stay-at-home parent contributes to the family's bottom line has great monetary value:

· Housecleaning
· Cooking
· Driving the children to school, activities, doctor and dental appointments
· Day care
· Laundry service

· And much, much more

The answer then, to the question "why purchase life insurance for a stay-at-home parent?" is to provide financial protection to your loved ones.

How Much Life Insurance Do Stay-at-Home Parents Need?


The financial contribution a stay-at-home parent adds to the family resources is often greatly underestimated. Research by Salary.com showed that the amount of money stay-at-home parents would earn if they received a salary would be $113,586 in 2013. Although specific to moms, we're sure the same would be said for stay-at-home dads too.

An Investopedia article also estimates a stay-at-home parent's salary at almost six figures.

Needless to say, we're not talking about an insignificant financial contribution, and the life insurance policy for a stay-at-home parent should reflect this fact.

What Are the Goals of Purchasing Life Insurance?

Before you purchase life insurance, you need to determine how much money you would like to leave your beneficiaries. Calculate this amount by deciding what the goals are you would like to achieve. Begin by asking yourself:

  • Do you want to ensure your family will be able to maintain the lifestyle they currently enjoy?
  • Do you want to leave them debt-free? Free of a mortgage loan, car loan or credit card debt.
  • Do you want to leave your children with an inheritance?
  • Do you want to make sure that if the surviving parent needs to leave their job (even if only temporarily) after the death of the stay-at-home parent, they can carry the household for a while until they get back on their feet?

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Also, don't forget to consider that the surviving spouse may need or want outside help-at least initially-to maintain the family's lifestyle and routine, and all of this can be attained with the help of having adequate life insurance coverage.

Furthermore, after a death, the surviving parent will have to pay funeral and burial costs, and may be ill-prepared to meet these expensive obligations without sufficient life insurance in place. The children will need money to fund their post-secondary education, and if the surviving parent must reduce their work hours after the death of the stay-at-home parent (to provide the time and attention the family needs), his or her income may be affected.

In all of the above instances, people can purchase enough life insurance to help the survivors keep their homes, take care of the everyday living obligations and pay any end-of-life expenses that present themselves at this difficult time.

Canadians May Have Insufficient Life Insurance Policies

Canadians often receive life insurance from their employers, and it may even cover their spouses. However, people don't always compare their employers' policies to the goals they would like to accomplish. If they were to do so, they may find that they and their families are underinsured and without the coverage they need to fulfill the goals they've set out.

How much is enough life insurance? A rule of thumb that serves as a good starting point is five to 10 times your annual, pre-tax, income. However, also consider that according to the Canadian Life and Health Insurance Association, about 21 million Canadians have some form of life insurance (as of 2011) and for the new life insurance policies underwritten, the typical policy was worth about $301,500.

Knowing the rule-of-thumb and the average face value of a new policy, do you and your family, have enough life insurance? If there's any doubt, compare life insurance quotes today and speak with a licensed life insurance representative who can answer all your questions, help you decide how much is enough and guide you on the different types of life insurance that suits your family and lifestyle best.

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