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The question arises - how much life insurance does a stay at home mom or spouse actually require, if any at all?
The amount can be determined by a professional in the life insurance trade – a professional life insurance advisor. He or she will undertake a "needs analysis" to come up with the amount of life insurance that is needed.
It's common thought that a stay at home mom does not offer any contribution to the family in terms of an annual income. Therefore, why would she require life insurance?
In answer to that, we can quickly list a number of very important daily activities a typical stay at home mom has to undertake:
No doubt there are other responsibilities besides those.
In 2012 a report was released claiming that the stay at home mother in the US would earn on average $122,732 per annum were they to fulfill the job roles listed above in a professional capacity.
In 2006, the financial guru Dave Ramsey provided an estimation that a life insurance policy of $300,000 - $400,000 would be appropriate for the average stay at home mom. Mr Ramsey argued that his figures assumed the necessity of hiring professionals in order to complete the same daily routine as the typical stay at home mom.
One of the longer term expenses a family will face without the stay at home mom or dad would be that of child care. On average, the cost of full time care in an infant care center in the U.S. is currently almost $16,000 per year. A single year of after-school care at an appropriate center cost on average close to $11,000.
Should you be home schooling your kids, the cost of education should be factored into the consideration for life insurance also. If you prefer to keep your kids out of public schooling, then either private schooling or a private teacher will be required. That most certainly pushes up the costs by a significant factor.
The cost of college education can also be met by a suitable life insurance policy. The College Board in the U.S. found that for private colleges, the annual hike in price of education is 5.9% whereas for public colleges it's a 6.4% rise per annum.
It may be that your life insurance policy may not cover all the costs involved in college education for your children, but it can lessen the blow substantially and reduces the potential reliance on borrowing money in order to fund years of education.
A life insurance policy is also a good way to build up something of a nest egg in order to provide an inheritance for your children when you are no longer around. Of course, an inheritance does not have to amount to millions of dollars. Simply leaving a reasonable lump sum is a good way to
help your children move on in the world as they get older.
In conclusion, a stay at home mom should always have life insurance because there are so many benefits to be gained. Simply because mom does not have a “proper” job and a “proper” income does not mean that what she does for her family, day in and day out is not incredibly
valuable. Add to this the other benefits that life insurance offers and it becomes an obvious investment to make.