Not the Breadwinner: Do You Need Coverage?
When families consider buying life insurance, they typically evaluate it with an eye on how much they would need to survive without the primary breadwinner's income. This is, after all, the money that pays for the mortgage or rent, utilities, food, and other major expenses, and so it is important to consider what sort of insurance payout is necessary to maintain the family's standard of living should this income disappear. However, a secondary earner and even a stay-at-home parent are making contributions to the household that should be considered when buying insurance products.
Secondary Wage Earners
Even if you are not the main source of your household's financial stability, you are still adding to the overall income level. Perhaps your wages are used for one or two parts of the budget, or for savings, or for family entertainment expenses. This means that you will not need to have a massive life insurance policy because your death would likely not result in tremendous financial hardship. However, when your spouse and children are grieving, you do not want them to be suffering another loss – one to the quality of life they currently have as a result of your economic contributions. A small policy can help to protect that, and give you peace of mind.
Stay at Home Parents
Life insurance is also very important for stay-at-home mothers and fathers whose primary job is the care of their young children. Even though they are not contributing an income to the household, the loss of a SAHM or SAHD would, without a doubt, pose a serious financial hardship to the family. Some expenses typically minimized by at-home parents are:
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Daycare: With young children, you must consider that you will need to find child care for them if the caregiver in your family becomes permanently disabled or dies. Depending on the number of children you have, and their ages, paying for daycare, a nanny, or other arrangement can be a tremendous financial burden that lasts for years.
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After School Care: Even with older children, a stay-at-home parent provides a valuable service, being there to receive them after school hours, caring for them, and transporting them to and from activities. These costs can put a strain on a family budget.
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Cooking and Housekeeping: Though these tasks are not exclusive to stay at home parents, they are often performed by the men and women in that role. Both with either wind up costing you in time – time that you may not have when you suddenly find yourself widowed and managing your family alone – or money, if you decide to hire someone to handle those obligations. Regardless, they are contributions that should not be ignored when thinking about a life insurance policy.
For families with a secondary earner or SAHM (or stay at home dad), the most important life policy to have is one that will compensate for the loss of the primary breadwinner. However, a second policy for the other parent really should be considered and purchased as soon as you can afford it. After all, the point of life insurance is to protect your survivors against any additional hardship.
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