Why Stay-at-Home Parents Still Need Life Insurance

Life insurance exists to soften the financial blow when a wage earner dies. But that framing leaves out someone essential: the parent who doesn't collect a paycheck. When you're figuring out how much coverage your family needs, the unpaid work of a stay-at-home parent belongs in that math.

About 18% of parents in the U.S. don't work for pay, according to a Pew Research Center analysis of Census Bureau data.[1] That doesn't mean they aren't adding real value to the household. The U.S. Bureau of Labor Statistics has estimated that the work of a stay-at-home parent adds up to roughly what you'd pay an administrative services and facilities manager and a teacher, combined.[2]

Not just for wage earners

For decades, life insurance mainly existed to replace a breadwinner's income, says Chris Mouzon, an independent insurance agent in Pennsylvania and co-founder of the financial services firm United Agency. That's shifting, as more families now weigh what a stay-at-home parent contributes when they shop for coverage.

“They bring an economic value to the household,” Mouzon says. If a stay-at-home parent dies, “you're going to need a financial bump to just make sure household things, your children, and your lifestyle still get taken care of.”

Putting a dollar figure on what someone means to a family can feel uncomfortable. But it's a conversation worth having, so there's enough money to keep things running after a loss. Factoring a stay-at-home parent's contribution into your coverage helps protect your family's financial footing.

Considering the value stay-at-home parents provide

Figuring out the financial fallout of losing a stay-at-home parent isn't simple, says Angela Moore, an Orlando-based certified financial planner and financial guide at Fruitful. “If you are a stay-at-home parent or primary caregiver and something happens to you, that would cause a ripple effect over many years.”

Much of what a parent does can't be neatly priced. But most of the household jobs they handle do have a going rate, and depending on where you live, it can be a steep one. Here's a look at what your family might need to cover, and what it could cost, if a stay-at-home parent were no longer there to handle it.

Caretaking

Many stay-at-home parents spend much of their time caring for children. It's a labor of love, but it's also demanding, costly work. U.S. Department of Labor data shows families pay between $6,552 and $15,600 a year for full-time child care for a single child.[3]

Household management

Stay-at-home parents juggle a long list of roles, and running the household is usually one of them. Here's what might slip without that extra set of hands.

Cleaning

Wiping counters and gathering toys might feel routine to a stay-at-home parent, but don't underestimate the hours these chores take, or what it would cost to replace them. Housekeeping services run around $16 an hour, per the latest BLS estimate.[4]

Laundry

Keeping everyone in clean clothes takes real effort, and hiring it out isn't cheap either. Weekly wash-and-fold service in New York City runs about $1.99 a pound, with bulkier items like bedding costing extra.

Cooking

Feeding a family is its own job. American households already spend an average of $3,933 a year eating out, according to BLS figures, and that number could climb fast without someone home to cook.[5]

Shopping

Grocery and goods delivery make life easier, but shopping still takes time and planning. Without someone to run errands, you might end up paying for a personal shopper or extra delivery fees.

Managing finances and more

This list barely scratches the surface. Your stay-at-home parent might also handle yard work, home repairs, pet care, or the household budget. Make sure that work counts toward your total, too.

Deciding how much coverage your family needs

When you're calculating how much life insurance a stay-at-home parent needs, weigh these costs as well. Keep in mind the right amount depends on your state, family size, and personal circumstances:

• Funeral expenses. The median cost of a funeral with a viewing and burial tops $8,300, according to the National Funeral Directors Association.[6]
• Education costs. Decide what you'd want to set aside for college or private school tuition.
• Temporary income replacement. Time away from work to grieve and to arrange new caregiving is essential after a loss like this.
• Debt payoff. Include any credit card balances or loans the stay-at-home parent holds that would need to be repaid.
• Additional financial support for children. Think about how you'd want to support your children financially, not just through childhood but into early adulthood.

If tallying all this feels like a lot, Moore says most family policies land in a similar range anyway. “After I ask these questions, I add it all up and it usually falls somewhere between $1.5 million to $2 million for most regular young families.”

Life insurance options for stay-at-home parents

Insuring a stay-at-home parent doesn't have to be pricey or complicated. For most families, term life insurance, the most budget-friendly option, covers the need just fine.

That's especially true if you're young and healthy. A healthy 30-year-old nonsmoker might pay around $18 a month for a 20-year, $500,000 term life policy, according to the brokerage Policygenius.

Mouzon suggests stay-at-home parents look at an individual term policy running 20 to 30 years, paired with living benefits, a feature that lets you draw on the death benefit early if you're diagnosed with a serious illness. “That living benefit will take care of the sickness side and in the event someone gets cancer, stroke, a heart attack, or some type of chronic or critical illness, this policy will pay out.”

If your family is still young, locking in coverage now rather than later can also save money over time, since younger, healthier applicants qualify for the best rates.

“You're the youngest and healthiest you're gonna be,” Mouzon says. “So you might as well just pay attention to it now while it's the cheapest.”

Sources

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1. Pew Research Center. Almost 1 in 5 stay-at-home parents in the U.S. are dads.
2. U.S. Bureau of Labor Statistics. Ted: The Economics Daily.
3. U.S. Department of Labor Blog. New data: Childcare costs remain an almost prohibitive expense.
4. U.S. Bureau of Labor Statistics. Occupational Employment and Wage Statistics.
5. U.S. Bureau of Labor Statistics. News release: Consumer Expenditures - 2023.
6. National Funeral Directors Association. Statistics.

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