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Life and Health


By October 1, 2010No Comments

When a parent dies, the emotional toll on the family is devastating, and when it happens to a stay-at-home parent, the repercussions of their death go far beyond the pain of grieving. Most employers offer Life insurance plans to wage-earning parents, but what if the parent’s job is within the home?

The emotional support provided by stay-at-home parents is immeasurable, but what can be measured is the value of the services they provide on a daily basis. Think about the overall worth of childcare, laundry, cooking, reliable transportation, grocery shopping, and keeping the house clean and organized. Childcare alone can cost around $10,000 a year at a local preschool or day-care center, with infant and toddler care being more expensive. Although stay-at-home parents might not earn a paycheck, their work around the house financially benefits the family, and their death could cause a serious financial crisis.

If a stay-at-home parent were to become ill or pass away, most families have some sort of support system in place to help get the kids to school or assist with household chores, but this help cannot last forever. By purchasing a Life insurance policy for stay-at-home parents, families can be relieved to know that their financial needs will be covered during times of loss and sorrow.

There’s no set guideline as to how much insurance a person should carry, but here’s a good rule of thumb. Take the number of years until your youngest child graduates college and multiply that by your current annual salary; your policy should be equal to or exceed this amount. As for stay-at-home parents, calculate their hidden salary by using the estimated value of all the services they normally provide. Most importantly, the policy should allow the family to maintain their current lifestyle if a parent should die.

Generally speaking, there are two types of Life insurance; Term and Permanent Life insurance policies. Term Life insurance is the more affordable of the two in the short run. The benefactor selects the length of the policy, usually in multiples of five years, and of course the face amount. Benefits are only paid out if the policyholder dies during the length of the policy’s term. Since renewing Term policies can be expensive, some individuals choose to convert their plans over to Permanent Life insurance coverage. Talk with your insurance representative about including a conversion privilege in your term policy, so you won’t have to jump through hoops if you ever decide to covert to Permanent Life insurance.

Permanent policies are different in that they cover individuals for their entire life. And with some policies there’s also a cash value component, which unlike long-term certificates of deposit, grows tax-deferred. Furthermore, policyholders are able to borrow against the cash value of their policy, for financing larger expenses. Permanent policies cannot be canceled by the insurance company, plus their benefits are usually guaranteed unless premium payments have been delinquent. The price of permanent policies remains permanent as well, meaning that families can expect to pay the same premium costs throughout the policy’s duration.

Whether families choose a term or permanent policy, work-at-home parents deserve the coverage of adequate life insurance. The financial benefits insurance provides can help families get through a very difficult time.