- Date : 15/07/2015
- Read: 2 mins
One should never underestimate the financial value of a stay-at-home parent. After all, there is also an opportunity cost associated with their decision to stay at home.
Yes, you need life insurance as well.
Are you a stay-at-home parent? Have you driven away all the insurance advisors who asked you to avail insurance? Logically speaking, buying life insurance makes sense only to the wage earner and sole provider, right? Perhaps it is time for you to reconsider that belief.
What does a stay-at-home parent really earn?
The essence of life insurance is to compensate for the financial loss caused by death. A common misconception is that a stay-at-home parent does not provide any monetary support to the family, and hence, does not need life insurance.
But we have to consider the fact that the services rendered by this parent are many, and- if outsourced- quite expensive.
Why does the stay-at-home parent need insurance?
The stay-at-home parent wears many hats – that of a full time nanny, a cook, a cleaner, a tuition teacher, an accounts manager and even a psychologist. Now, imagine losing this willing, multifarious worker.
What would the family do? The family will have to outsource all the tasksperformed by the stay-at-home parent. This would mean throwing the financial plans of the family off track and, as a consequence, incredible losses for the family.
What should be the sum assured?
Okay, you agree that you need life insurance after all. But, what expenses should the policy cover?
- Household expenses
The key objective of insurance is to cover the economic losses caused due to death. Hence, the policy sum assured should cover the expenses towards all the household tasks, for a few years at least.
- Funding for children’s education
The policy should help towards your children’s education and the childcare costs likely to be incurred.
- Loans
Your policy should be able to contribute toward any loans your spousemight be servicing.
One should never underestimate the financial value of a stay-at-home parent. After all, there is also an opportunity cost associated with their decision to stay at home.
