Moms have many roles when they work from home. Among their duties are those of cooking, cleaning, child rearing, and shopping. While they do not earn an income that adds to the families top-line, it is understand that effective home economists add significantly to the bottom line.
One great misunderstanding in some homes is whether or not a mom should be carrying a life insruance policy. After all, if she passes away no income will be lost. However, this is a very short sighted approach because while she is not bringing home the bacon, the cost of cooking it is also being foregone since she is not charging for her services.
When considering the services a stay-at-home mom provides, many believe that a minimum policy of $350,000 should be carried. This is easier to understand when the costs are broken down.
Why $350,000 in Life Insurance?
This advice comes from finance expert Dave Ramsey who offers that people need to insure themselves at 10 times their income. While a mom does not take home an income, the surviving spouse is going to need about $35,000 per year (depending on where one lives) to replace all of the duties she has been providing for.
While it is true that dad will end up picking up some of the duties, such as laundry, he is also going to need more money for eating out since he will be unlikely to make it home at 5:00 every day to cook a prepared meal.
In addition, the grocery budget may increase because many stay-at-home moms are savvy with coupon clipping and other means of saving money from inexpensive programs at the YMCA to free events at the local library.
Do not Forget Childcare Costs
One of the hardest aspects of losing a spouse who took care of the children is that she was always there for them. This is very difficult emotionally, but the economic strain cannot be overlooked either.
The cost of putting two children into a daycare at a YMCA in Bay Shore, New York is $1,800 per month. This program runs for 8 hours. In order for a professional to work effectively, he is either going to have to reduce his hours, work from home, or pay the extra costs for before and after school hours.
Moms without life insurance who are married to men earning salaries of $50,000 per year may end up leaving their surviving spouses in a quandry over whether they can even afford to work given this cost.
While daycare costs vary in different areas, these numbers can be easily adjusted to reflect the situation that one can be left in without the proper insurance in place. This article on KANETIX further discusses the economic strains involved.
What About Moms who Have Grown Children?
Just as working spouses have a responsibility to take care of their loved ones at home, those at home should be taking the same consideration into effect.
For this reason, burial costs should be in one’s life insurance policy, at a minimum. This would be between $10,000-20,000. However, it must be taken into consideration, as well, that there are other costs incurred that should be taken care of.
For example, there may be debts from auto loans and credit cards. An outstanding mortgage balance or student loans could be paid off, too.
The bottom line is that stay-at-moms (of babies or older children) provide a significant value that cannot be overlooked. In addition to this, their passing will bring about expenses that need to be taken into consideration as well.
image credit: fotolia
Lucas Taylor is a personal finance wiz that takes pride in informing people around the web on all things insurance related. He writes from the perspective of an informed customer, bringing a unique outlook on the world of personal finannce and insurance.