Nothing weighs more heavily on a parent’s mind than knowing that their children are depending on them. The need to provide for one’s family is a primary motivating factor for many of us going to work day in, and day out. In addition to being a breadwinner, a parent who is serious about providing for their children should take a somber look at how said children will be cared for, should the unthinkable happen. That’s where term life insurance comes into play.
Various financial counselors will make very detailed recommendations as to how a provider should calculate the amount of term life insurance he should purchase to care for his family. Some recommend taking into account how much consumer debt the insured carries, how much he earns in a year, or whether or not he owns a home. Some, like notable financial coach, Dave Ramsey, simply recommend purchasing ten to twelve times your annual income.
But how much term life insurance should be purchased for a stay-at-home parent, who is earning very little or no income? No income times ten or twelve still equals no income, however, ask anyone who has ever experienced the loss of a caregiver, and they will tell you that a caregiver is priceless. Several years ago, Forbes.com estimated that the average stay-at-home mother, with all her responsibilities, would earn an annual salary of approximately $115,000 if the work she did at home to keep the household running was done for an employer. In that case, multiplying $115,000 by ten or twelve would set the necessary term life insurance at upwards of one million dollars! Obviously, a good care-giver, be it a stay-at-home mom OR dad, is a priceless asset. But is 1.2 million dollars in term life insurance too much?
To answer this question, one should consider how much it would cost to pay someone else to do the job that the stay-at-home parent does. What costs, such as that of daycare, or private education would come into play? What are the ages of the children? Are any of them disabled and needing additional or long-term care?
Determining the appropriate amount of term life insurance for a stay-at-home parent can help provide peace of mind, knowing that your loved ones will be taken care of. For more information about determining the amount of term life insurance that is suitable for your specific needs, contact us. Our experienced and knowledgeable staff will be happy to sit down with you and determine what amount of coverage will best meet your needs and provide for those you care about.
Robert Macoviak is the President of Oyer, Macoviak and Associates. Oyer, Macoviak and Associates is the oldest independent insurance agency in Boynton Beach and has been in business since 1953. Oyer, Macoviak and Associates are vested members of the community who are committed to doing business face-to-face and being your insurance advocate in times of need.