The One Aspect of Parenting You Do Not Want to Fail At...
- Working Moms and Dads need Life Insurance
- Non Working Moms and Dads do Too
Stay at home Dads Can Ignore Term Life Insurance? - Why you could not be More Wrong.
The internet is full of reminders that stay at home parents need life insurance and this is most certainly true. There is a full variety of factors about why. However one of the new and increasing trends is how the reverse breadwinner effects the need for stay at home parents to have life insurance.
Yes - Stay at Home Dad's Need Level Term Life Insurance!
The Need for Stay at Home Dads to Buy Life Insurance:
Stay at home parents (Dad's included) need life insurance because of the value they bring to the table caring for the family.
One simple way to think of this is to consider what would happen if you needed to hire someone to do all that they do. With a working parent, this can be rather simple. How much money post tax do they take home per year?
The Financial Need for Both Spouses to Carry Term Insurance:
In today's modern world where both spouses often work or stay home or change roles the requirements for both to carry life insurance has never been greater. There are many situations in which one parent may take four or five years off to help care for their children and will hence potentially lose their group term coverage from work. Failure to properly cover that parent for those four or five years could have a devastating impact on that families future. Think about this.
To some extent it does not really matter who is and who is not working. Unless you are lazy parent that neither works or helps out with the family - you are providing a needed service for your children. That service has an economic value and that economic value will need to be replaced should (god forbid) something happen to you.
The Changing Nature of Our Society:
Recent studies have shown that more and more Dad's are opting to stay home with the children. A pew center research article shows that between 1989 and 2012 - the number of "Stay at Home Dads" has roughly doubled from 1.1 Million to about 2.0 Million.
How to Calculate Stay at Home Parents Life Insurance Needs:
For stay at home parents, this can be extremely difficult to calculate. Some might call this calculation the non working spouse life insurance method. Here are some ideas of costs to add to the cost calculator:
- Full Time, 50 hour per week Nanny or Day Care, annualized over one year.
- Increased cost to hire someone to do the laundry, annualized per year.
- Increased cost for house cleaning, annualized per year. This is beyond what you may already be paying for house cleaning.
- Increased non volunteer costs both at school, sports teams, and in clubs. Many groups provide a discounted rate if you volunteer, but you may not be able to acquire that discount moving forward. Again attempt to annualize this number.
- Increased meal delivery or eating out per year.
- New Transportation costs once children reach a certain age, again annualized per year.
- Added Tutoring expenses, per year.
- New Therapist related costs for both the Surviving Spouse and all the children, annualized for perhaps a few years or so.
- Specialized costs given the size of your family and proximity to extended family. Do you have more than one child? Do you live more than 100 miles away from extended family? This may simply mean buying lots more flights to grandmas.
- Other specialized specific costs - depending on your situation, annualized per year.
your number may equal something in this range:
$45,000 to $75,000 per year?
Now that yearly cost merely needs to be multiplied by the amount of time until your youngest child will be fully out of the house.
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The World of Life Insurance is Complex, Don't Get Lost.
All those Costs Add Up:
Those new and additional costs are likely to cost upwards of at least $40,000 to maybe $100,000 per year. Stay at Home Moms and Stay at Home Dads provide real value. And their consideration to the family bottom line is often not understood. However if you sit down and run some basic numbers, more than likely you will find that the non working spouse, although they may not take home a pay check, require a form of inexpensive level term life insurance themselves. This is very important.
There are other ways to estimate the amount of money needed. And really all of these methods are just estimates. Its impossible to be exact with necessary required life insurance needs due to the changing factors involved. What may be accurate and complete one month could suddenly be off in two months.
The other method of estimating life insurance needs is to consider the ten times earning that the working spouse requires and estimate somewhere in the range of 50% to 70% of that amount. As an example if a Working Mother needed $1,000,000 in life insurance than perhaps the Stay at Home Dad would need $500,000 to $700,000 in term life insurance.
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Stay at Home Dads Need Life Insurance too
An important note here: many life insurance companies will not write more life insurance on the non working spouse than the working spouse. In other words the working Mom needs to have more life insurance than the non working Dad.
Tips for Stay at Home Dads:
Learn About Life Insurance, become familiar with some of the types and terms.
Contact a trusted Independent Insurance Agent.
Check the Financial Strength Rating of the proposed insurer.
Either calculate the amount or shoot for about 50-70% of the amount of the working spouse's life insurance Coverage.
Be very careful buying life insurance for any purpose other than pure insurance.
Don't Overspend, Buy only what you can easily afford.
Do not sign anything that you do not understand.
The Reverse Breadwinner Life Insurance Issue:
Although women still earn on average less than men, some women are indeed starting to earn more than their husbands. This Reverse Breadwinner effect is manifesting itself in numerous ways including the so called Reverse Breadwinner Life Insurance issue. This is what is happening in modern day America as more and more women are out-earning their husbands and the husbands are either opting to stay at home with the kids or are continuing their work This can become an issue when husbands/dads fail to secure the necessary life insurance.
How to Solve the Reverse Breadwinner Life Insurance Issue for Your Family:
Its very simple for a family to solve this problem. Get level term life insurance for both spouses, working or not. Even if one of of you is quasi working, get insurance as well. If the stay at home mom or dad ends up going back to work full time, potentially you can either drop the current policy you bought or supplement/reduce it with another life policy.
Buying level term life insurance is very simple. Get started here today by quoting yourself and by speaking with us about your specific situation.
Buy Level Term Life for your Dad:
The World of Life Insurance is Complex, Don't Get Lost.
Get insured today. Solutions Require Actions. Quote - Apply - Buy!
Questions about Stay at Home Dads and Life Insurance:
Question: Do All stay at home parents need life insurance?
Answer: No, not all stay at home parents need life insurance. Families that are independently wealthy and that have enough money saved up for retirement, college, and all their day to day activities may not need life insurance.
Question: Why do Stay at home Dads need life insurance just like Stay at home moms do?
Answer: Because they provide a valuable service just like the mom does.
Question: Where do Stay at home dads buy life insurance.
Answer: From independent insurance agents such as ourselves. However they may purchase life insurance from any licensed insurance agent.
Answer: No, not really its a cross between affordability and needs calculations. It is really a ball park estimate for stay at home parents.
Question: What is a Reverse Breadwinner?
Answer: The Breadwinner is a semi official term that refers to the person that is working and paying the bills. Therefore the Reverse Breadwinner is when the Mom is working and the Dad is either staying at home or making significantly less money. The Reverse Breadwinner as it relates to insurance is the issue with Stay at Home Dads Needing Life Insurance.
Question: What is the Reverse Breadwinner Life Insurance Issue?
Answer: The Reverse Breadwinner Life Insurance Issue is the problem getting stay at home dads to understand that they need to get life insurance too. Many parents, moms and dads feel that if they are not working they do not need life insurance, this is not true.
Question: Should I get life insurance for my spouse?
Answer: Yes, you should get life insurance for your spouse. Both parents working or not, should have life insurance, generally speaking, if you have children. There are exceptions. Generally speaking though your Spouse will need to participate in the policy application and issuance since it is their life that we will be insuring.
Question: Should my housewife have life insurance?
Answer: Yes, your housewife should have life insurance. Both spouses probably out to have some level term life insurance.
Question: Should my househusband have life insurance?
Answer: Yes, your househusband should have life insurance. Both spouses need to have some level term life insurance. Househusbands, housewives; they both do.
Question: Should my children have life insurance?
Answer: This is a very different discussion. In general life insurance should be used to replace lost income or lost work in the case of the stay at home dad. Children generally provide no income and typically no work value. There are situations where you may wish to purchase for burial expenses, but its not a great use of your money.
Thanks for reading:
I appreciate you reading our article about life insurance needs for stay at home dads / the non working spouse life insurance method / the reverse breadwinner life insurance issue.
Additional Resources for Stay at Home Dads and Life Insurance:
About this Article:
More than some of our articles, this is about a growing societal problem. Finances for American families are changing and with there risk needs too. Life insurance is an important component. This short article was created to help families, measure and understand that need.
Feel free to contact us with your questions: 415-294-5454 or via email anytime.