Are You a Stay-at-Home Parent? Here's Why Dave Ramsey Said You Need Life Insurance

Traditionally, when people buy life insurance, a big part of the reason is because loved ones are relying on their income. In fact, it's common for individuals who are getting covered to be told they should buy a policy with a death benefit equal to 10 or 12 times their earnings.

Stay-at-home parents do not have paychecks going into their bank accounts, so they may not think about needing coverage. Finance expert Dave Ramsey said this is shortsighted and a big financial mistake. Ramsey believes stay-at-home parents need life insurance coverage because the services they provide have a huge value.

"A life insurance policy for a stay-at-home parent doesn't replace their income -- it provides the money necessary to cover all the jobs the SAHP did before they passed away," Ramsey said. He advised purchasing between $250,000 and $400,000 in coverage to ensure there are funds available to provide these services.

But, is Ramsey right?

Do stay-at-home parents really need life insurance?

When it comes to the question of whether stay-at-home parents really need life insurance or not, the answer is an unequivocal yes.

I'm not a stay-at-home parent, but I'm a work-at-home parent with a flexible schedule so I do many of the tasks an at-home parent would. This includes things like watching my kids during the day, cooking, grocery shopping, taking my kids to school, trying to keep my house from turning into a disaster, driving my children to activities, and an almost endless list of other mundane tasks.

During most weeks, I end up spending way more time on childcare activities than I spend on actual paid work. And, if I wasn't here to do all of these things, it would be a huge burden on my husband (who has an out-of-the-house job without flexibility). He would end up having to either drastically reduce his work schedule (and income) or hire someone to handle everything I do, or both. And hiring someone to manage the household full time would cost a fortune.

In fact, Salary.com surveyed 19,000 mothers, determined all the jobs they do, and estimated the market value of all of that work. This research revealed that, in 2021/2022, the median salary for stay-at-home moms would come to $184,820. And, of course, this would be the same for stay-at-home dads too, of which there are a growing number.

The reality is, the services that an at-home parent provides would absolutely need to be replaced in the event of a death, and life insurance would likely be necessary to provide the funds to do that.

Don't leave loved ones in the lurch

Any family who has a stay-at-home parent should make sure to carefully heed Ramsey's words of advice and get the right coverage in place ASAP. No one knows when disaster will strike, and if a parent passes, not only will there be a need for funds to pay someone to fulfill their role, but there may also be a need for additional money to help children with therapy to cope with the effects of losing a caregiver.

Term life insurance is a very affordable way to make sure that the money is there to help surviving loved ones during this difficult time. So, buy a policy ASAP to ensure that everyone can still be cared for if the worst occurs.