How to Figure Life Insurance Needs for a Stay at Home Partner
Should you buy life insurance for your stay at home partner? Some would say no. Insurance is generally purchased to cover the loss of income when there is a loss of life. But what if your partner doesn't work? Is there still a loss of income?
The answer might surprise you. In fact, you should consider life insurance needs for your stay at home partner.
There is an annual value to staying at home
A stay at home partner takes care of the home and kids – and it's not without a price. Lots of men and women give up their corporate jobs to stay at home and take care of the family. If an unfortunate event should happen, have you thought about who will take care of their responsibilities at home?
Although stay at home parents don't have a monthly income they do provide services and those services have a financial value. Think about how much it would cost to pay for child care, a cook, laundry services, and home cleaning services for the year.
Now, ask yourself if you could cover those costs alone on one income. Buying life insurance for your stay at home partner can help cover these costs until you adjust to the new routine.
Think about the kids and their education
If your partner chose to stay at home to take care of the kids, think about what would happen if that support is no longer there. Stay at home parents may act as a tutor and that expense will now be out of pocket if your spouse should pass away. When you evaluate your family’s life insurance needs, this should be factored in.
Then there is the actual cost of education. If you suddenly find yourself single, your income will be used to pay for household expenses such as daycare and after school activities. This may cut in to your savings, or require you to reduce the opportunities you provide your children. If you are currently putting money aside for your children's education that may no longer be possible.
Buying life insurance for your stay at home partner can leave a financial legacy for your children and help finance their post secondary education.
Non-working parents have final expenses
Life insurance can cover the cost of all final expenses when someone passes away. These expenses include final burial costs and taxes as well as the cost to transport the body if your partner wishes to be buried somewhere else other than your current location. These are all expenses that are standard regardless of someone's income or contribution to the family.
According to MoneySense the average cost of a funeral in Canada is over $6,000. Could you afford to pay that if your spouse passed away? Life insurance can cover all the final expenses and eliminate the financial burden that comes with the loss of a life. When determining life insurance needs, don’t forget about this factor.
The cost of coverage may be high
The cost of insurance coverage for a stay at home partner can be more expensive than it is for the working spouse because they don't have the option to purchase additional coverage with their employer. Generally, group life insurance premiums are cheaper than buying an individual policy, but in this case the life insurance expense is all out of pocket and can't be shared by an employer. However, even so, it might still be worth it for the peace of mind that comes when you know your family is adequately covered for any situation.
When evaluating your life insurance needs, talk to a professional to find the best coverage for your family's needs, and shop around for the best coverage for the best price.