Life Insurance for Stay-at-Home Parents: Picking the Right Coverage for Caregivers

"Our agent recommended my husband carry a million-dollar policy because of his obligations. My policy is just enough for funeral expenses."

This is a conversation I've heard many times. I thought about this and came up with some things for all families to consider. Usually it is a woman who stays home and cares for the children, but sometimes it is the man. Regardless, the caregiver usually has little or no life insurance. This can be a costly mistake.

It is a given that in any family the one bringing in the most money has the largest insurance policy. The assumption is that the stay-at-home spouse makes no significant contribution to the family coffers. This can be the most expensive error a family makes.

Before making a decision about how much insurance to carry on a stay-at-home partner, a family needs to determine what services and goods the caregiver supplies and what it would cost if they had to be bought outright.

The most obvious expense is child care. How much will it cost to take care of the children while the wage earner is at work if there isn't a spouse to take up this task? This is a variable cost depending on area but a few phone calls to various child care facilities will give you a rough idea of the expense. A quick example is--if the cost is one hundred twenty-five dollars per child per week (a very conservative estimate) the expense will be sixty five hundred dollars per year. For two children this will be twelve to thirteen thousand a year. What happens when a child is sick? Take off work? Hire someone to stay for the time the child has to stay home? Child care alone adds up to a significant expense.

What about food? Eating at home is a lot cheaper than eating out. Even a meal at a fast food place can cost two or three times what it would if prepared at home. Dine at a full service restaurant and the price will quickly quadruple. If the caregiver isn't there to prepare meals can the family absorb this extra expense? What will it cost to hire someone to do the grocery shopping? These are not the only things that will cost a family a significant amount of money if the caregiver isn't available to do them. Cleaning the home, washing clothes, and running errands are chores that the person staying at home does routinely. Hiring someone to do most of the things the stay-at-home spouse does costs money; a lot of money. How much do these chores cost when someone else is hired to do them? Before making a decision on just how much insurance to carry on the "non-productive" stay-at-home spouse a family must do their homework and recognize just how much that spouse is actually contributing to the family coffers.

Incidentally, I did not tackle the subject of sex for the surviving spouse, but you might want to do a quick search on just how much each sexual encounter would cost you if you were paying a professional for that particular service. Since even a non-pro will cost you dinner and entertainment fees the expense isn't insignificant.