Why Stay-At-Home Moms Need Life Insurance In 2021?

By Stephanie McCullough Published: January 3, 2021

Years ago, I got into an argument with a friend. 

He was a high-income lawyer whose wife had taken a break in her career to take care of their four kids.

I asked if they had life insurance on her. 

He scoffed at me and said, “No, she doesn’t earn any money!” I was really surprised by this, given how busy she was and how many responsibilities fell to her. 

After 23 years as a financial advisor and licensed insurance agent, I’m no longer surprised. I know how common his opinion is.

Unfortunately, I was unable to convince him that buying life insurance on his wife was worth it

Today I hope I can convince you. 


Life Insurance Isn't Only For Breadwinners 

Why does anyone need life insurance? I always say as soon as another person is dependent on you, you should think about getting some insurance.

Most calculators designed to help you decide how much you need start with the question, how much do you make?

The idea is that if the breadwinner, let’s call him dad, were to die, and thus his income stopped, the death benefit would provide money the family could use to pay their bills.

I totally agree the breadwinner needs to have life insurance - probably much more than they do right now.

But even if dad has millions of dollars of coverage, that still leaves a big hole in the family's risk management.

THE SIMPLY INSURANCE WAY

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Agents not required.

Get quotes and sign up online without talking to an agent. But, we are here if you need us. 

Unbiased, expert advice.

Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.

Coverage in minutes.

You can get no exam life insurance coverage within minutes of getting your quotes and applying.

The Value Of Women's Unpaid Work

The perspective of an insurance needs calculator is not really surprising when you think about it. 

Raising children and caregiving, in general, is vital work to our society. And yet, although our culture claims to value family, such work is consistently undervalued.

It is evident in the low wages of teachers, childcare workers, and healthcare aides. 

Money is an interesting thing.

It is important to survival because it’s how we get the things we need – both our most basic needs and the things that make life more enjoyable – often, we get the priorities flipped.

We tend to value things based on their price tag. It’s a type of mental shortcut we use, sometimes without realizing it.

A $70 bottle of wine must be much better than a $17 bottle, right? 

So, if a mother’s work in the home is unpaid, does it really have any value?

Of course, it does; it’s just a bit invisible.

A study by Salary.com valued stay-at-home-moms’ work at a median salary of $178,000 per year! 

An analysis from Oxfam in 2020 reported that unpaid work by women in the U.S. would be worth $1.5 trillion in 2019, using minimum wage per hour for its calculations.

And I would argue that moms should make much more than minimum wage!

And yet there’s no paycheck, no dollars coming into the bank account for all the hours we moms work.

No visual or tangible representation of the crucial value of what we do, which makes it easy to overlook in the broader financial plan for the family.

What Does It Cost To Replace A Mom?

Now let's imagine the non-working spouse, let's call her mom, is tragically out of the picture.

Obviously, the family will be devastated – the emotional cost of losing a parent is real and lasting. 

But let's look at the practical day-to-day impacts. Who will step up to do all the jobs a mom fills in a day, a month, a year? It's a big list, as we know. 

  • Childcare worker
  • Cook

  • Housekeeper
  • Laundress
  • Driver
  • Shopper for food, and everything else
  • Director of kids schedules and activities
  • Supervisor of school and homework
  • Healthcare manager, scheduling and driver
  • Bookkeeper and bill payor
  • Travel and event planner
  • Communications specialist
  • And probably 12-25 others I’ve forgotten!

One person had been doing all this. And now she's gone. Is it realistic to think that the remaining family members can or will step up to do all of the jobs?

That would be tough, especially if the kids are young. Dad may be working long hours to keep up his income.

Unless extended family steps in, most likely, they're not going to find someone to do it all for free.

So, they'll need to pay – probably more than one person. This, of course, increases the expenses of the household with the same income.

And let's face it, most American families don't have much wiggle room in their cash flow already.

INSURANCE WHERE YOU LIVE

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What Would Life Insurance Enable?

Let's imagine again, that mom is suddenly gone. But this time, a large check arrives in the mail a few weeks later.

Everyone is devastated. Life will never be the same. And, there's a pot of money available to help with the logistical issues.

Now it wouldn't be such a stretch to pay someone to do some or all of mom's jobs.

If dad wanted to cut back on work to do some of the home tasks himself, there would be money to replace his income reduction.

Or the insurance check could be used to pay off the mortgage and fund college savings accounts, which in turn allows dad to work less.

The stress on family members may increase costs for mental health and/or wellness services. Money in the bank means they wouldn't have to deny themselves care.

One friend of mine took his kids out of school on a giant trip and even hired a tutor to go with them so the boys could keep up with school after his wife's tragic death.

After witnessing and caring for her long and painful illness, he decided this would be a calm and bonding experience for them.

God Forbid Both Parents Were To Die 

Having insurance on mom and dad means more assets to whoever steps into the custodian/caregiver role for the children. 

That is a huge obligation for someone to take on, and of course, you'll want to ease the financial burden on whoever is looking after your precious babies.

As always, money allows choices, options, and flexibility. Money is NOT a cure-all for the situation. It never is.

But having life insurance on mom can avoid piling a financial disaster on top of the emotional one.

THE SIMPLY INSURANCE WAY

No Exam Life Insurance made easy.

Agents not required.

Get quotes and sign up online without talking to an agent. But, we are here if you need us. 

Unbiased, expert advice.

Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.

Coverage in minutes.

You can get no exam life insurance coverage within minutes of getting your quotes and applying.

How Much Insurance Do You Need?

How much insurance should you have? Probably a number that sounds really big.

The answer, as with so many things around money, is “it depends.”

What do you want the money to enable if you were gone? Here are some ideas on how to answer the question:

Will You Need To Hire Outside Help?

If the goal is to provide funds to pay for one or more service providers, do some research on what services cost in your area.

Don’t assume family will do everything.

Bad things can happen to them as well – illness, disability, moving for work, passing away. Maybe your calculation looks something like this:

  • Housecleaning once a week +
  • Driving 1 hour per weekday +

  • Tutoring 3 hours a week +
  • Food delivery 3 nights a week = Your Monthly Cost!

Let’s say that totals up to $2,400/month x 12 months per year = $28,800 per year.

For how many years would you need these services?

What About Paying Off Your Mortgage?

If the goal is to pay off the mortgage to relieve that monthly expense, how much do you owe on the house?

What is the annual bill for taxes, insurance and maintenance?

How About Funding A College Savings Account?

If the goal is to fund the college savings accounts, what type of school would you like your kids to attend, and how much of the bill do you want to cover?

Then you can use a calculator like this one to come up with a number. 

You can see how the numbers add up quickly.

The really short answer is, it’s hard to have too much.

Most people have too little. (By the way, while you’re doing this exercise, make sure to look at how much you have on your breadwinner spouse as well! It may be time for a top-up.)

But Isn't Life Insurance Expensive? 

Actually, no. Here’s how to think about it. The purpose of insurance is risk management.

It should address a possible event that may be unlikely but would be financially devastating.

We have homeowner’s insurance in case of a house fire or a tree falling through the roof.

Because it would be really expensive to repair or replace our house, we pay a more modest annual cost so the insurance company would help us pay for those needs, should they arise.

The idea is, for a small known cost today, you avoid an enormous possible cost in the future. Life insurance fills a similar role.

As with all insurance, of course, we hope you never have to use it. But having it in place is the responsible thing to do - like having seatbelts and airbags or childproofing your home.

We Hate Talking About Money & Death

Money is a common cause of stress and friction in marriages. Know that it's normal! And you want to find a way to talk about it anyway.

On top of that, we humans don't like thinking about our own mortality or possible disaster scenarios.

Many of us end up avoiding actions like getting our will written and buying life insurance. (Go get your Will done if you haven't!!)

Try to take emotion out of it by focusing on the numbers and the financial risk. Hopefully, this article can help.

THE SIMPLY INSURANCE WAY

No Exam Life Insurance made easy.

Agents not required.

Get quotes and sign up online without talking to an agent. But, we are here if you need us. 

Unbiased, expert advice.

Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.

Coverage in minutes.

You can get no exam life insurance coverage within minutes of getting your quotes and applying.

Conclusion - Taking Action

Think through what it would take to replace all the unpaid work you do for your family

Be sure you're talking regularly with your spouse about money and finances. One piece of that conversation should be disaster preparedness.

Just like you stock up on food and supplies before a storm, know what you have in place in case disaster should strike

As you talk about the potential bad scenarios, include "what if one of us passes away?" 

Money is not an end in itself. It is a tool that enables us to meet our needs and build the lives we want to live for ourselves and our families.

If suddenly you were no longer here, wouldn't you want choices, options, and flexibility for your family? 


Stephanie McCullough

About the author

Stephanie founded Sofia Financial in 2011 after 14 years as a financial advisor, with the goal to empower women to make wise financial decisions. She is a licensed insurance agent and married with two kids. She earned an M.A. in International Economics from the Johns Hopkins School of Advanced International Studies and a B.A. from Duke University.


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